Issue 72  September 2020

Welcome to the latest edition of Gem Compliance’s monthly regulation newsletter. The aim of the newsletter is to present a summary of relevant industry news which has occurred during the month in an easily digestible format. As such, not all sources of industry information or FCA publications (and no PRA publications unless specified) may be included.  

Clients and associates of Gem Compliance should periodically check the FCA’s, and where relevant, the PRA’s websites for regulatory developments. We hope you find this newsletter useful and should you have any feedback, compliance queries or require advice on any of these topics, please do not hesitate to contact us.


  1. Other Newsletters and Updates  
  2. Main Features:
  3. Other Publications
  4. FCA Press Releases
  5. Speeches
  6. Enforcement Actions and Prosecutions
  7. Industry News:
  8. Regulation 
  9. Coronavirus - industry updates
  10. Brexit
  11. Financial Crime
  12. Data Protection
  13. Scams, Fraud & Warnings
  14. HMRC
  15. Pensions and SIPPs
  16. Other
Other Newsletters & Updates

September has been the month for headline news starting with the UK’s controversial Internal Markets Bill to enable the UK government to override parts of the Withdrawal Agreement and which also has a potential impact on the future of devolution in the UK. The Bill has caused the EU to threaten legal action for breaching international law and has resulted in a number of high-profile resignations and public censures of the government. It has also made the possibility of a no-deal end to the transition period more likely. 
Just as the UK Government had started encouraging workers to return to the workplace, the doubling of virus cases in September caused a U-turn on this stance and the implementation of further measures across the UK by Westminster and the devolved parliaments. 
Also in September, the BBC broke the story that more than 2,500 documents including 2,121 suspicious activity reports, which cover about $2tn of transactions, sent by banks to the US Financial Crimes Enforcement Network (FinCEN), had been leaked by Buzzfeed News and shared with the International Consortium of Investigative Journalists (ICIJ). The BBC’s Panorama programme also covered the story. The leaked reports show, amongst other things, that the UK is considered by FinCEN to be a higher risk jurisdiction – indeed, over 3,000 UK companies are named in the leaked files – and that a number of major banks have enabled criminals and sanctioned individuals to move cash into, around and out of the financial system. This leak is different to previous leaks, such as the Paradise Papers 2017, because the FinCEN papers are not just documents from one or two companies but from a number of banks including HSBC, Barclays, Deutsche Bank, Standard Chartered, JP Morgan and United Arab Emirates’ central bank. The leaked documents also reveal that, in FinCEN’s view, the UK is home to one of the “dodgiest addresses” in the world: Suite 2B, 175 Darkes Lane, Potters Bar, Hertfordshire.
A large volume of FCA and industry news this month relates to the pandemic Coronavirus. Firms are recommended to check the dedicated Coronavirus section (for both firms and consumers) on the FCA’s website on a regular basis for any updated information.  
The FCA issued its September Regulation round-up in which it comments on pandemic exclusions in professional indemnity insurance (PII) for general insurance and mortgage intermediaries, encourages firms to “take control” of LIBOR transition and introduces its focus on the consumer investments market by issuing a Call for Input (linked and summarised below). The FCA also highlights that the first REP008 return under the SM&CR, where firms need to report to the FCA whether they have taken disciplinary action against individuals who are not Senior Managers for breaches of the Conduct Rules, is due by 02/11/20 for the period 09/12/19-31/08/20.
At the time of writing, the FCA’s Policy Development Update showing pending and future FCA consultations and policy statements was last updated on 11/09/2020. 
The ICO’s (Information Commissioner’s Office) most recent newsletter (September) is available here. There has been no further newsletter from the Financial Ombudsman Service (FOS) since no. 153, which was included in the August newsletter. The latest version of the PRA digest is here and was issued on 1 September. 


In July 2016, the FCA introduced an annual financial crime reporting obligation for certain firms to supply the FCA with information on a range of indicators that reflect the potential money laundering (ML) risks of the firms in scope. 
The obligation to provide this financial crime information is set out in the Handbook under SUP 16.23, Annual Financial Crime Report (REP-CRIM). 
The current obligation to provide REP-CRIM information is based on 1) firm type, irrespective of revenue threshold, and 2) activity type and total revenue of £5 million or more. 
Approximately 2,500 out of the approximate 23,000 firms supervised by the FCA under the Money Laundering Regulations 2017 submit REP-CRIM information.
As set out in the FCA’s 2019/20 Business Plan, in CP20/17 the FCA is proposing to:
  • Extend the scope of firms required to provide REP-CRIM information to include firms that carry on regulated activities that potentially pose a higher money laundering risk. This extension will be irrespective of a firm’s revenue. 
  • Remove two activities (home finance mediation and making arrangements with a view to transactions in investments) from the REP-CRIM reporting obligation. 
A detailed list of firms proposed to be now in scope is set out in Annex 4 of the CP but in summary it includes:
  • All FSMA authorised firms within the scope of the MLRs and:
    • that hold client money or assets (i.e. subject to FCA Handbook CASS 5, 6 or 7), or 
    • that carry on an activity that the FCA considers poses a higher ML risk (see Annex 4 for details).
  • All payments institutions except for payment institutions that only carry out at least one of the following payment services: 
    • Money remittance only - that are supervised by HMRC for anti-money laundering (AML) purposes,
    • Account information services and/or payment initiation services,
    • EEA-authorised payment institutions which are permitted to provide a payment service in the UK only under the freedom to provide services. 
  • All electronic money institutions, 
  • All Multilateral Trading Facilities (MTFs), 
  • All Organised Trading Facilities (OTFs), 
  • All cryptoasset exchange providers and custodian wallet providers.
The FCA doesn’t rule out extending the scope of REP-CRIM to firms at lower money laundering risk in the future. The FCA also highlights that irrespective of whether they are required to provide REP-CRIM information, firms should continue to assess, and be able to evidence assessment of, their systems and controls, including against relevant financial crime publications, to identify and manage money laundering risks. 
The closing date for responses is 23/11/2020 and the FCA plans to publish a Policy Statement with final rules, and possibly implementation dates too,  by Quarter 1 2021.

2. Call for Input: The Consumer Investments Market

As part of the FCA business plan 2020/21, reducing harm in consumer investments was identified as a key priority. As a result, the FCA published a Call for Input on the 15th of Sept 2020 aimed at identifying areas where the consumer investments market is not functioning efficiently for customers. The request is looking for views on what changes the regulator can make to improve consumer protections and outcomes in this market. 
The Call for Input focuses on the following core questions:
  • What more can the FCA do to help the market offer a range of products and services that meet straightforward investment needs? 
  • How can the FCA better ensure that those who have the financial resources to accept higher investment risk can do so if they choose, but in a way that ensures they understand the risk they are taking? 
  • How can the FCA use the regulation of financial promotions to make it easier for people to understand the level of protections afforded to them when they invest?  
  • What more can the FCA do to ensure that when people lose money because of an act or omission of a regulated firm, they are appropriately compensated and that it is paid for fairly by those who cause the loss? 
  • How can the FCA safeguard consumers from scams? 
  • How can the FCA ensure the market is competitive and guarantee financial organisations are striving to offer better products and services?
One area the FCA is seeking specific input on is exemptions including the high net worth and sophisticated client exemptions. The former currently, and for the last two decades, applies to investors who have an annual income of £100k or more, or more than £250k net assets. The FCA has seen firms, often unregulated firms, abusing exemptions such as these by coaching people through the criteria. The Government’s consultation on the ‘Regulatory Framework for Approval of Financial Promotions’ includes the effectiveness of the current exemptions under the financial promotions legislative framework. But the FCA is also interested in understanding how the exemptions work in practice and welcomes views on as part of this Call for Input, which it will share with the government.
This Call for Input will be of interest to a broad range of stakeholders including consumers, firms and governmental bodies.
The deadline for firms providing feedback is 15/12/2020. The FCA will use the feedback to guide its focus of work over the coming years, with the aim to deliver an efficient market for consumers.

3. Speech by Christopher Woolard, FCA interim chief executive: Evolution of a new model for financial regulation in the UK

This speech was Mr Woolard’s last speech as interim CEO before he stepped down from the role.
Questions covered in the speech:
  • What lessons can be taken from Covid-19 so far? In terms of society, technology and the manner in which the FCA regulates?
  • How the FCA itself might change to meet some of these challenges, and what constants may remain?
  • Given the backdrop of the UK’s exit from the EU, what’s kind of regulation is needed?
Points highlighted by the FCA:
  • Coronavirus (Covid-19) is bringing the future forward and with a potential impact on firms’ business models.
  • The economic impact of the pandemic has underscored the need for change within the regulator.
  • To do so effectively, the FCA must learn lessons from the past, but it needs to look to the future.  
Other takeaways from the speech:
  • Covid-19:
    • The FCA has made consumer investments a business priority and it is determined to see better outcomes in this space. 
    • The FCA is open to making some major changes in its regulatory approach and has issued a  Call for Input (summarised above in Feature 2) to help it consider what changes should be made.
    • Faced with greater innovation on a bigger scale, in Mr Woolard’s view the regulatory sandbox should be expanded in terms of scale and ambition to handle occasional very large tests, and if need be, backed with more flexible authorisations powers.
  • FCA Reform:
    • The FCA is establishing a new, more empowered function to manage intelligence coming into the FCA. 
    • In his speech, Mr Woolard stood by his colleagues some of whom “routinely put themselves in the way of harm for the public they serve” and who may be required to deal with dishonest, corrupt or even dangerous individuals. 
    • Mr Woolard also commented that the FCA had helped “millions of ordinary people” but admitted there would be “painful lessons” to learn for the FCA when several investigations into potential regulatory failures are concluded in the Autumn. 
  • The Future of Regulation:
    • Mr Woolard referred to the speech he made last year on ‘regulation in a changing world’ in which he argued that the FCA needed to think about what the regulatory system was trying to achieve and whether those outcomes were being met. In this speech Mr Woolard commented that the “product boundaries have become blurred” highlighting the need to work more closely with other agencies and ensure the FCA’s own requirements are “more straightforward”. Mr Woolard extended this line of thought to the Handbook and “whether it is doing what it needs to do” and called on amendments to the Handbook if necessary”.
    • The FCA is working to minimise disruption for firms at the end of the Brexit transition period. However, its message to firms regarding preparations is to “continue to prepare – indeed to ramp up preparations – for a range of scenarios”. 
4. FCA’s Annual Report and Accounts: 2019/20

The FCA’s Annual Report and Accounts provides a record of what the FCA has achieved during the last financial year and the work it has undertaken to deliver the strategic and operational objectives set by Parliament. Its wide remit means it must make choices about where it focuses its resources to drive the right outcomes for users of financial services.
At the end of the reporting period, the extent of the impact from the coronavirus pandemic on the industry for the foreseeable began to emerge and the FCA, along with the Bank of England and Government, took swift action to manage the impact on consumers’ finances, firms’ resources and the financial system. Amongst other things,the FCA started a legal test case (which has now concluded) to gain clarity for 370K policyholders and their insurers on which business interruption insurance policies should pay out. The FCA has also worked with the Government and the British Business Bank on the UK’s coronavirus business interruption loan scheme (CBILS) and the bounce back loan scheme (BBLS). 
To understand the impact on firms' financial resilience and assess the potential impact on consumers, the FCA has collected data from around 13,000 solo-regulated firms to identify areas of vulnerability and is to repeat this survey again to see how things have changed. The FCA confirms it will continue to take decisive action in the 2020/21 period to ensure as many businesses and people reach the other side of the pandemic’s immediate impact “whenever that it is and whatever that will look like”.
This Annual Report covers the year ending 31/03/20, therefore, the majority of this report covers non-pandemic related work. 
Headline statistics highlighted by the FCA for the 2019/20 financial year:
  • Action against firms:
    • Imposed 15 financial penalties totalling £224m
    • £116m reimbursed to victims of push payment fraud (40% increase on previous year)
    • 65 AML investigations under way
    • Took action that resulted in firms paying over £135m to over 32K customers for failures in information about enhanced annuities options.
  • Markets:
    • The FCA regulates the conduct of about 60K firms 
    • Determined 4,133 cases for new firm authorisation and met the statutory deadline in 99.7% of cases.
    • Dealt with over 1,000 international requests for assistance and disclosures.
    • Opened 415 preliminary reviews into market abuse.
    • Received over 1,000 separate whistleblowing disclosures covering nearly 3,000 separate allegations and in 218 cases took action to mitigate harm.
    • Issues at third parties were identified as being the root cause of 16% of reported incidents in 2019/20.
    • Assessed 824 incident reports, 790 of which were cyber or technology related.
    • Received notification from over 1,000 EEA-based firms that they want to use the Temporary Permissions Regime.
    • Over 600 fund managers have notified that they want to continue temporarily marketing over 9,000 EEA-domiciled investment funds/ sub-funds in the UK.
  • Protecting customers:
    • Received over 20K reports of firms trying to do business without authorisation, which is the highest number ever received in a single year and an 11% increase on last year. 
    • Published 715 consumer warnings about unauthorised firms.
    • Received over 300K online video views of its latest ScamSmart campaign 
Some of the FCA’s other work undertaken in the last financial year:
  • Under the heading of ‘protecting consumers’:
    • Invested in its ScamSmart campaign to increase public awareness of the risk of fraud.
    • Implemented a temporary ban of mass-marketing of speculative illiquid securities, which it is proposing to make permanent.
    • Provided clarity on how cryptoassets fit into the regulatory framework. 
  • Under the heading of ‘conduct, culture and resilience’:
    • The FCA set up a working group on how to drive ‘purpose’ (which is considered central to culture and business strategy but also plays a key part in reducing potential harm) in specific sectors and also across the industry as a whole. 
    • Remuneration practices and incentives have remained an area of focus for the FCA.
    • The Financial Services Register has been an area on which the FCA has faced criticism from the Complaints Commissioner and various stakeholders. Improvements have been made to the register to make it easier to use, improve data quality and provide more information. The launch of the register followed a new rule requiring authorised firms to confirm annually that firm standing data is correct. 
    • In December, the Senior Managers and Certification Regime (SM&CR) was extended to virtually all authorised firms. 
    • Following work on operational resilience over a number of years, the FCA reports that the vast majority of firms adapted quickly to the short notice remote/home working requirement and issued a joint consultation paper with the Bank of England on further improvements firms can make to deal with the unexpected. 
    • The FCA has found that some firms are not managing their third-party service providers effectively and that there is a growing dependence on third parties particularly from new firms and a growing dependence on a small number of third parties for specific services. These trends increase the complexity of business models and firms’ operational risks.
    • The importance of effective systems and controls in relation to third parties and change management have been highlighted to firms through its assessment of technology and cyber resilience. 
    • The FCA published the second of its Cyber Insights documents, sharing best practice on key areas of cyber resilience. It also ran a webinar in March 2020 on Operational Resilience and a Cyber Security podcast.
  • Under the heading of ‘EU withdrawal’:
    • The FCA has worked to close the communications gap with small firms on EU withdrawal, as highlighted by the independent Practitioner Panel’s survey, by increasing the volume of and channels for communications.  
  • Under ‘regulator of the future’:
    • The FCA has put in place a new data strategy which amongst other things has increased its data analytics capacity and intelligence function to deepen its understanding of markets to enable it to identify and react to firm and market issues swiftly. 
Other Publications 

FCA Coronavirus Publications 
FCA gives relevant authorised firms a 2-month extension to the 31/08/20 deadline for publication of a complaints data summary under DISP 1.10A.1R. Relevant firms must publish their complaints summaries no later than 31/10/20. 
Results of the FCA’s Business Interruption test case are in and the Court has found in favour of the FCA/policyholders on the majority of the key issues presented. The FCA reports on its website that the judgment says that most, if not all, of the disease clauses in the sample of policies reviewed provide cover. The test case has also clarified that the Covid-19 pandemic and the Government and public response were a single cause of the covered loss, which is a key requirement for claims to be paid even if the policy provides cover. 
The FCA updated its webpage on extending deadlines for publishing fund reports and accounts setting out how it intends to end the temporary relief, which was announced in April 2020, in stages over the coming months.
FCA issues a statement setting out its approach to assessing listing applications from cannabis-related companies in response to queries it has received from such companies looking to list in the UK. The FCA states that: “While medicinal cannabis was legalised in the UK in 2018, investment in overseas-licensed medicinal cannabis businesses remains a legally complex area.” There is concern that the proceeds from certain cannabis-related businesses could amount to criminal property under the Proceeds of Crime Act because of the extra-territorial reach of the Act. This means that it also covers conduct outside the UK that would be criminal if it were conducted in the UK. 
Corporate documents 
Second edition of the Regulatory Initiatives Grid published by the Financial Services Regulatory Initiatives Forum, first issued in May 2020 
Minutes from April 2020’s Financial Services Regulatory Initiatives Forum
FCA’s Diversity Annual Report for 2019/20
FCA’s Investment Management Data – Annual Report 2019/20
FCA’s Enforcement Data – Annual Report 2019/20
FCA’s Statement for the year ending 31st March 2020 on Modern slavery and human Trafficking
FCA Board Minutes from 22nd and 23rd July 2020 meetings
Consultation Papers 
CP20/18, Quarterly Consultation Paper 29 covers some minor, miscellaneous changes to the Handbook
CP20/19, General insurance pricing practices market study - Consultation on Handbook changes
CP20/20, The FCA’s approach to international firms
Policy and Guidance Statements
Mortgages and Coronavirus: Additional Guidance for Firms 
FG20/3, Branch and ATM closures or conversions
FCA issues Market Watch 64 in which it provides information to help MiFID II firms prepare for the end of the Brexit transition period.
FCA’s Market Watch 65, newsletter on market conduct and transaction reporting issues 
Letter from Dame Elizabeth Gloster QC to the FCA and a response letter from the FCA regarding a revised timetable for completion of the independent investigation into the FCA’s regulation of London Capital & Finance plc. 
FCA published an update covering the FCA’s recent DataSprint, which brought together 120 participants including regulated firms, academia, professional services, data scientists and subject matter experts. The participants collaborated on developing high-quality financial datasets to be used in the FCA’s forthcoming digital sandbox, which will focus on three areas linked to COVID-19:
  • detecting and preventing fraud and scams,
  • supporting the financial resilience of vulnerable consumers, and
  • improving access to finance for small and medium-sized enterprises. 
Dear CEO Letter regarding the outcome of the Business Interruption Insurance test case
General Insurance Portfolio Letter regarding the FCA’s Supervision Strategy for Personal and Commercial Lines Insurance Intermediaries
New FCA webpage to help firms prepare for LIBOR transition.
Occasional Paper 56, Fair exchange: Presenting foreign exchange quotes to improve consumer choice
Latest report on the FCA’s 5 Conduct Questions Programme
FCA updates its SM&CR webpage and now includes tables on good and poor practice

FCA Press Releases

The FCA and The Pensions Regulator (“TPR”) report that, according to complaints filed with Action Fraud, almost £31m has been lost to pension scammers. The FCA warns that “the true number of victims is likely to be much higher as savers fail to spot the signs of a scam and don’t know how much is in their pots.” This finding is apparently particularly true for football fans. Therefore, as part of the ScamSmart campaign the FCA and TPR has teamed up with football commentator Clive Tyldesley to try and prevent football fans from “scoring a pensions own goal”.  
FCA proposes the next stage of support for mortgage borrowers who continue to face payment difficulties due to coronavirus. 
The FCA has jointly announced (alongside the PRA and Bank of England) the appointment of Amerdeep Somal as the new Complaints Commissioner. 
Christopher Woolard, interim FCA CEO, is to chair a review of the future regulation of the unsecured credit market. Mr Woolard is stepping down from the FCA Board and executive decision-making roles from 01/10/2020 and once the review is complete, Mr Woolard will be moving on from the FCA.
FCA publishes Final Report of its market study into the pricing of home and motor insurance and sets out proposals to tackle its concern that these markets are not working well for consumers. Proposals include an end to dual pricing so that an existing customer at renewal pays no more than an existing customer through the same sales channel. 


Bank for International Settlements (BIS) published a speech by Benoît Cœuré, Head of the BIS Innovation Hub, discussing the importance of RegTech and FinTech and their potential benefits and challenges with respect to regulation and financial institutions. 
Speech by Marc Teasdale, Director of Wholesale Supervision – Supervision Investment, Wholesale & Specialists Division: A regulatory perspective: the drivers of culture and the role of purpose and governance.

Enforcement Actions and Prosecutions

Belgian authorities open investigation into Credit Suisse for “money laundering and unlawfully acting as a financial intermediary, as well as against Belgian customers who have not yet undergone tax regularisation.”
Accountancy firm reports a 10% increase year on year in tax evasion whistleblowing to HMRC. 
FCA publishes Final Notice banning Julian Rafat, a former senior trader at Moore Europe Capital Management LLP, from performing any function related to a regulated activity. Mr Rafat plead guilty to insider dealing in 2014 and in 2015 he was sentenced to 19 months in prison, fined £100K and ordered to pay £159K in costs. 
FCA issues Final Notice publicly censuring former Worldspreads CEO, Conor Foley, for market abuse and banning him from performing any roles linked to regulated activity. The Final Notice follows a Decision Notice from July 2020 which also included a fine of £659K but Mr Foley subsequently provided evidence of serious financial hardship so the fine was replaced by a public censure. Mr Foley has also withdrawn his appeal to the Upper Tribunal. Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said: 'Mr Foley misled investors in the Worldspreads Group and manipulated the market for its shares in a concerted and deliberate scheme. He should have no place in UK markets.'
FCA has published a Decision Notice for market abuse concerning Corrado Abbattista, a trader, portfolio manager, partner and Chief Investment Officer of Fenician Capital Management LLP, confirming a fine of £100K and a prohibition from conducting any functions in relation to a regulated activity. Mr Abbattista has referred the decision to the Upper Tribunal. 
Other industry news: 

FCA is to repeat its Covid-19 survey of authorised firms to “understand the change in firms’ financial positions with time”.
ESMA publishes list of thresholds by Member States above which shareholders can be identified under the Shareholder Rights Directive. 
The Complaints Commissioner published two final reports setting out recommendations for the FCA in relation to the Financial Services Register, where inaccurate information led a complainant to invest in a cloned firm, and regarding the FCA’s anticipatory duties under the Equality Act to make reasonable adjustments for those with disabilities. 
The BOE has published a webpage setting out its priority areas for research over the coming years. 
ESMA issues Call for Evidence in relation to its review of transparency requirements for equity and non-equity instruments under the MiFIR. ESMA is particularly interested in feedback on technical issues and policy gaps and any unclear provisions. 
The Working Group on Sterling Risk-Free Reference Rates published a statement of recommendations on standard market conventions for sterling loans based on SONIA compounded in arrears (the Working Group’s alternative to Sterling LIBOR) to support the transition away from the use of LIBOR.
EBA issues opinion on definition of credit institution and scope of authorisation under the Capital Requirements Directive (CRD) IV. 
PRA updated its webpage on credit unions with letters sent to directors of category 5 credit unions setting out the findings of its 2020 assessment of these firms.
The European Supervisory Authorities (ESAs) published a survey on presentational aspects of product templates under various articles of the Sustainable Finance Disclosure Regulation. The survey focuses on pre-contractual and periodic disclosures by financial market participants, including alternative investment fund managers, UCITS management companies, insurance undertakings, institutions for occupational retirement provision, and pan-European personal pension product providers. 

Coronavirus - industry updates

European Parliament's Committee on Economic and Monetary Affairs (ECON) published a draft report on the proposal for a Directive amending the MiFID II Directive in respect of information requirements, product governance and position limits to help the recovery from the COVID-19 pandemic.
The Council of Europe’s MONEYVAL Committee has issued a report aimed at helping the global community to counter new criminal activities which are exploiting the COVID-19 pandemic, including the sale of counterfeit medicines and cybercrime.
BBC reports that up to £3.5bn of furlough claims may have been fraudulently claimed or paid out in error. 
In a speech at FT Adviser’s Advice Forum in September, it is reported that Alex Roy, head of consumer distribution policy at the FCA, said the FCA was likely to delay more work as the industry battled an ongoing coronavirus workload. Mr Roy said: "Inevitably more important and valuable pieces of work will be stopped in the FCA while we can no longer see them as important in this current crisis."


New Bank of England (“BoE”) webpage on the Temporary Permissions Regime. 
The International Swaps and Derivatives Association (ISDA®) published a paper analysing the impact of Brexit on the derivatives trading obligation and the characterisation of over-the-counter derivatives in the EU and the UK.
Government announced that a UK-Japan free trade agreement has been agreed in principle.
PRA and BoE issue consultation paper (CP13/20) on changes to their rules, binding technical standards and the use of temporary transitional powers required before the end of the Brexit transition period.
Coutts is reported to be one of a number of UK banks that, as part of their no-deal planning, have written to clients resident in the EU telling them that they will no longer be able to serve them from January 2021. Other banks are expected to follow suit. 

Financial Crime

A recent Joint Statement issued by FinCen (the U.S. Financial Intelligence Unit) on due diligence requirements under the Bank Secrecy Act/Anti-Money Laundering Regulations for individuals considered to be Politically Exposed Persons (“PEPs”) explains: “The Agencies [on whose behalf the joint statement has been issued] do not interpret the term “politically exposed persons” to include U.S. public officials.” Furthermore, Bank Secrecy Act/Anti-Money Laundering Regulations in the US don’t define a PEP but recognise it as a “term commonly used in the financial services industry to refer to foreign individuals who are or have been entrusted with a prominent public function, as well as their immediate family members and close associates”. This seems to suggest that the U.S. only has an outward looking view of PEPs, as highlighted by this industry blog here. It might be worth bearing this in mind when performing due diligence on or otherwise dealing with U.S. customers or transactions with a US nexus.    
Accountancy and business advisory firm warns of potential negative impact on M&A deals for non-compliance with corporate criminal offences (CCOs) such as failure to prevent tax evasion facilitation and failure to prevent bribery and corruption. The firm reports that it is seeing relevant clauses being added to deal documentation and measures to prevent these offences being scrutinised as part of due diligence. The firm also reports: “we have witnessed a purchaser threatening to pull out of a deal at the eleventh hour purely because the target company was unable to evidence that any steps had been taken towards compliance with CCO legislation."
The Financial Markets Law Committee (FMLC) published a letter it has sent to the European Commission (EC) responding to the action plan for a comprehensive EU policy on preventing money laundering and terrorist financing highlighting concerns about the narrow definition of "virtual currencies" in the Fifth Money Laundering Directive. The FMLC suggests that the Commission clarify, and consider broadening, the definition of virtual currencies in the next iteration of the anti-money laundering (AML) framework.
EC issues report assessing whether member states have duly identified and made subject to the Fourth Money Laundering Directive, all trusts and similar legal arrangements governed under their laws. Sixteen member states have indicated that no trusts or similar legal arrangements are governed by their laws. The remaining other member states, and the UK, notified trusts or similar legal arrangements governed by their laws. The EC concludes that a lack of common approach to the features that define similar common law trusts does not ensure legal certainty and a level playing field and might leave loopholes that allow little-known arrangements to be used in money laundering schemes. To tackle this problem, the Commission will consider setting up an informal working group to identify common, objective and consistent criteria for the identification of the relevant legal arrangements governed under their law. 
FATF publishes report setting out red flag indicators associated with virtual assets. These red flags include, amongst others: features that increase anonymity, jurisdictions with weak or absent AML/CTF measures for virtual assets, and irregular transaction patterns. 
Transparency International calls on EC to take action on member states’ ‘golden visa’ schemes, which have been shown to be vulnerable to corruption and money laundering.
The US Department of Justice is attempting to seize $330m held in the bank account of a major London law firm, Clyde and Co, over allegations that it is derived from the proceeds of one of the world’s largest financial frauds concerning the Malaysian investment fund, 1MDB, which is at the heart of a Malaysian corruption scandal.  

Data Protection

The ICO has been alerted to a cyber-security breach of a London-based outsourcing firm that resulted in the details of more than 50,000 letters, sent by banks and local authorities, being made publicly available on Google.  

Scams, Fraud & Warnings

According to FT Adviser, a recent report from UK Finance reveals impersonation scams in the first half of 2020 were almost double what they were in the first half of 2019.


It is reported that a Freedom of Information request by law firm Pinsent Masons reveals that HMRC’s tax evasion teams are currently investigating 250 wealthy individuals and 23 businesses in the UK.

Pensions & SIPPs

Appeal to the High Court results in an increase of more than 2,000% to the compensation awarded by The Pensions Ombudsman in a pension transfer delay complaint. The Pensions Ombudsman originally awarded the complainant £2,000 in 2018 but the High Court ruled that the award should be recalculated as if the delay caused by maladministration did not happen to take into account lost investment opportunity. 
DWP published the government's response to the February 2019 consultation, ‘Investment Innovation and Future Consolidation’, which included a consultation on additional measures aimed at improving outcomes for members of defined contribution pension schemes.


Online wrap platform Nucleus has published a document on its website in which it clarifies the situations in which it will accept certain types of e-signatures.
UK Finance has published a guide to LIBOR discontinuation for business customers.
Network for Greening the Financial System published an overview of environmental risk analysis by financial institutions in which it provides examples of how environmental risks are transmitted to financial risks.
Law Commission announced that work has begun on analysing English law in the context of two emerging technologies: smart contracts and digital assets.
London Capital Finance investors given green light for a judicial review of the FSCS

This newsletter contains generic information and has been generated for professional clients and associates of Gem Compliance Consulting Limited only and should not be regarded as advice. We will not be liable for loss, however caused by parties acting on the information contained herein.

Copyright © 2020, Gem Compliance Consulting Limited, All rights reserved.

Gem Compliance Consulting Limited, Registered in Scotland, no. SC 294346.

This email was sent to <<Email Address>>
why did I get this?    unsubscribe from this list    update subscription preferences
Gem Compliance Consulting Limited · Hudson House · 8 Albany Street · Edinburgh, Midlothian EH1 3QB · United Kingdom

Email Marketing Powered by Mailchimp