Regulatory Update: UK Edition – August 2021

The FCA has published consultation paper 21/26 on proposed rules to introduce the Investment Firm Prudential Regime (IFPR). The new prudential regime is for UK firms authorised under the Markets in Financial Instruments Directive (MiFID).

The new regime will streamline and simplify the prudential requirements for MiFID investment firms that are prudentially regulated by the FCA in the UK. The regime is expected to take effect in January 2022.

The paper highlights the following proposals:

• Disclosure.
  • Investment firms that are not small and non-interconnected to disclosure information about their risk management and governance arrangements.
  • Investment firms to make some disclosure on their remuneration policies and practices.
• Own funds
  • Rules to be in place addressing excess drawings made by partners or members in an LLP
• Technical Standards
  • Application of the onshore technical standards with specific modifications as set out in MIFIDPRU
• UK resolution regime
  • In June 2021, the Treasury confirmed that investment firms would no longer be subject to the regime
• Applications and notifications
  • Specific notification form for changes to investment firm groups. A proposal to have a generic application form and a generic notification form.

CCL can provide advice and help to assess the impact of the IFPR, for more information please contact us.

The FCA has published a statement reminding firms about the potential financial crime risks linked to Afghanistan. Firms are reminded to be aware of the possible impact of the recent events which may have an impact on financial activity when assessing risks relating to particular customers.

Whilst Afghanistan is not currently listed as a high-risk jurisdiction, firms must continue to apply risk sensitive enhanced due diligence measures where there is a high risk of money laundering or terrorist financing. Firms should consider the impact of recent developments and specifically, firms should:

• ensure that they appropriately monitor and assess transactions to Afghanistan
• ensure any suspicious activity is reported to the National Crime Agency (NCA) and that they meet their obligations under Money Laundering Regulations and terrorist financing legislation

For advice and support in relation to financial crime matters, please contact us.

The European Securities and Markets Authority (ESMA) has updated its Q&As regarding the Market Abuse Regulation (MAR). The updated Q&A provides new answers to the following areas:

• Interaction between MAR and Credit Rating Agencies Regulation.
• Disclosure to the public of credit ratings and inside information.
• Distribution of subscription ratings and disclosure of inside information.

The Serious Fraud Office (SFO) has announced it has charged five individuals with bribery and money laundering in relation to suspected payment of bribes to win contracts within the UK construction sector.

Robb Simms Davies and Nigel Wilson, former senior executives, are charged with bribery and money laundering and Trevor Wright and Roger Dewhirst are charged with received the suspected bribes.

The individuals have made their first appearance at court and the case has been listed for trial.

The Office of Financial Sanctions Implementation (OFSI) has imposed a penalty on TransferGo Limited of £50,000 for issuing payments to accounts at the Russian National Commercial Bank violating EU sanctions.

The penalty notice set out TransferGo to have mistakenly believed that the payments were not prohibited because the account holders and beneficiaries were not sanctioned.

The breaches within this case occurred prior to Brexit and relate to breaches under the EU regulations. Since 31 December 2020, all sanction regimes are operated under UK regulations. The OFSI will continue to investigate any breaches occurring before the 31 December 2020.

For advice and support in relation to financial crime matters, including sanctions, please contact us.