Regulatory Update: UK Edition – June 2021

The FCA has updated its webpage on how to apply for authorisation to include a section on change of legal status. Firms looking to change their legal status must now submit a new firm authorisation application along with a deed poll declaration. This will require the firm to deal with any existing complaints in the new legal entity.
The new application will be assessed the same way as any other authorisation application.

CCL has over thirty years of authorisation experience, assisting over one thousand firms with their applications. For help and advice on authorisation applications, please contact us.

The HM Treasury has published its consultation response regarding the regulatory framework for approval of financial promotions. The Treasury has set out in its consultation the concern in the current regime lacking any specific assessment imposed on authorised firms before approving financial promotions for unauthorised firms. The lack of assessment means there is a potential risk in expertise, due diligence and regulatory oversight.

The Treasury proposes for the Financial Services and Markets Act 2000 (FSMA) to be amended so that authorised firms are no longer able to approve financial promotions for unauthorised firms unless it has gone through a new ‘gateway’ operated by the FCA.
The next steps set out in the consultation will be for the government to bring forward the legislation when time allows and for the FCA to consult on the proposal for implementing the gateway. The FCA will further announce the final rules once it has considered the responses to the consultation.

CCL has decades of experience in advising on and reviewing financial promotions. For guidance and advice, please contact us or to see how our RegTech solution, CORE can help you with your financial promotion approval workflow, please contact us for a demo.

The FCA has published a policy statement PS21/6 on the implementation of the Investment Firms Prudential Regime (IFPR). The IFPR is a new prudential regime for UK investment firms, authorised under the Markets in Financial Instruments Directive (MiFID). The statement is the first of a series that will set out the FCA’s rules to introduce the IFPR.

To read CCL’s insight into the Impact of IFPR on Exempt CAD Firms, please click here, or to discuss how CCL can help assess the impact and help you tackle the requirements of the IFPR, please contact us.

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The FCA has published a consultation paper on proposals to introduce climate-related financial disclosure rules and guidance for asset managers, life insurers and FCA-regulated pension providers.
The high-quality information on the management of climate-related risks and opportunities will aim to help clients and consumers make better informed decisions on their investments.

The consultation paper will apply to asset managers, life insurers, non-insurer FCA-regulated pension providers, including platform firms and Self-invested Personal Pension (SIPP) operators and FCA-regulated providers.

Comments are invited to be submitted by 10 September 2021.

The PRA has released a statement on firm authorisation under the Temporary Permissions Regime (TPR). The statement outlines the current status with the regime. The PRA has seen a considerable volume of applicants of varying scale and complexity across a range of firms. In considering that firms may choose not to apply for authorisation until the end of 2022, the PRA expects to take authorisation decisions on a case-by-case basis dependent on PRA resourcing and governance processes.

This would result in some firms receiving an application outcome ahead of others. The timing of authorisation should not be taken as indication of the PRA’s view of risks at the individual institution.

The European Banking Authority (EBA) has published an analysis of the current RegTech landscape in the EU. The report assesses the benefits, challenges and risks faced by financial institutions and RegTech providers.

The report further identifies potential risks from RegTech that supervisors will need to address and proposes actions designed to enhance knowledge and skills in competent authorities.
CCL has a proven track record of developing and delivering RegTech services through our CORE platform. To receive a demo of our solution, which helps firms comply with regulatory requirements worldwide, please contact us.

The FCA has released a statement extending the Temporary Registration Regime (TRR) for existing cryptoasset businesses from 9 July 2021 to 31 March 2022.

The TRR was established in 2020 for existing firms but the FCA has found that a significantly higher number of businesses are failing to meet the requirements set out in the Money Laundering Regulations (MLR). As a result, a number of businesses have withdrawn their application. The extension will allow firms to carry on business whilst the FCA continues with its assessment.

For advice and help on obtaining registration, please contact us.

The Financial Action Task Force (FATF) has published the jurisdictions under increased monitoring who are actively working with the FATF to address the deficiencies in their regimes to counter money laundering and terrorist financing.

The jurisdictions that have been identified as having strategic deficiencies are: Albania, Barbados, Botswana, Burkina Faso, Cambodia, Cayman Islands, Haiti, Jamaica, Mauritius, Morocco, Myanmar, Nicaragua, Pakistan, Panama, Philippines, Senegal, South Sudan, Syria, Uganda, Yemen and Zimbabwe.

The publication further provides a brief summary of each jurisdiction, their deficiencies and reforms.

The FCA has sent a Dear CEO letter to Retail Banks setting out actions needed in response to common failings identified in AML frameworks. Firms have been identified to have several common weaknesses in their frameworks including:

• Governance and oversight
• Risk assessments
• Due diligence
• Transaction monitoring
• Suspicious activity reporting.

Firms and their senior management are to consider the content of the weaknesses identified and take the necessary steps to assure that the firm’s financial crime systems and controls are commensurate to the risk profile of the firm.

For advice or support with your AML frameworks, please contact us to see how we can assist.

The FATF has published guidance on proliferation financing risk assessment and mitigation. The guidance is intended to help countries and relevant persons effectively implement new FATF requirements introduced in October 2020 to identify, assess, understand and mitigate their proliferation financing risks.

The guidance emphasises the requirement for financial institutions to apply the new obligations in a proportionate manner to the risk identified, in order to avoid contributing to de-risking or financial exclusion.

The FATF will continue its efforts to promote understanding of the new FATF requirements with webinars on the subject to be planned for late 2021.

The Crown Prosecution Service (CPS) has released a news article on the conviction of a formal chairman in a UK group within the payment services industry. The conviction is in relation to an offence in connection with the laundering of the proceeds of an investment fraud worth £850,000 and involving more than 60 victims.

Dominic Thorncorft, former chair of the association of UK payment institutions, was found guilty of failing to alert the authorities to money laundering and allowing it to continue.

The CPS has updated its guidance on prosecuting standalone ‘failure to disclose’ cases under section 330 of the Proceeds of Crime Act. The guidance now makes it possible to prosecute an offence under section 330 after 2 June regardless of whether an offence of money laundering has been substantiated.

The aim of the update is to encourage professionals to disclose any suspicion of money laundering to law enforcement.

The FCA has fined claims management company, Crosfill & Archer Claims Limited, £110,000.

The fine was regarding unsolicited marketing calls to people who registered not to receive the type of sales call. The firm either had no evidence of individuals having consented to receive the calls or the firm was unable to confirm what consent had been obtained from purchasing customer data from a third-party data provider.