My colleague Ben Ticehurst, a Director in our UK Government Investigations and White Collar team, recently shared a timely insight on increased use by the Financial Conduct Authority of Account Freezing Orders (“AFrOs”) and Account Forfeiture Orders (“AFOs”) on our Anticorruption Blog. He reports on the recent decision for the FCA to secure its first AFO, a tool used for asset recovery under Part 5 of Proceeds of Crime Act 2002, for £2 million against QPay Europe Limited. Until recently , AFO and AFrO powers, granted by the Criminal Finances Act 2017, have mainly been used by the National Crime Agency, regional police forces, and His Majesty’s Revenue and Customs (“HMRC”). However, given the FCA’s stated intent in their recently published three year strategy to use their “enforcement and intervention powers more actively”, these measures should now be firmly on the radar of compliance teams and MLROs of FCA-regulated entities.
Given the relevance to readers of this blog, we wanted to call this to your attention – check out Ben’s full post here: Account Freezing and Forfeiture Orders: is the FCA waking up to its investigative powers? | The Anticorruption Blog
You’ve been served…well, virtually.
In what is widely touted as the first of its kind in the UK, a recent order made in D’Aloia v Persons Unknown & Others by the High Court marks an expansion of the potential methods for service of claims permitted for English proceedings, by allowing proceedings to be served via airdrop of Non-Fungible Token (NFT). The decision marks a useful step forward for victims of fraud in the crypto-asset space.
FCA future gazing
On 14 July FCA CEO Nikhil Rathi gave a speech at the Peterson Institute for International Economics, setting out a helpful overview of the FCA’s intended future approach to its aspects of its regulatory responsibilities. In addition to emphasising cross-border co-operation, Mr Rathi elaborated the following focus areas:
New FCA Consumer Duty confirmed and explained
With a new Consumer Principle, clarified outcomes and phased implementation, the FCA released the final rules and guidance on a new Consumer Duty at the end of July: one of the biggest changes in the retail consumer regulatory landscape in recent years.
Use it or lose it: FCA accelerates crack down on unused regulatory permissions
The Financial Conduct Authority’s new powers to more swiftly cancel or change firms’ regulatory permissions have now come into effect. These powers are particularly aimed at firms that have permissions they are not using. Firms can be required to prove they are carrying out the regulated activities they have permissions for, or risk losing their permissions. It can be expected that the FCA will be increasingly active in the coming months in looking to strip firms of unused permissions via this new streamlined process. Firms should continue to think carefully about whether they have permissions they are not using and should voluntarily relinquish to avoid incurring the regulator’s ire.
Banks’ Quincecare duty in APP fraud Cases potentially extended
In March the Court of Appeal overturned an earlier High Court judgment and held that the application of Quincecare duty does not depend on the fact that the bank is instructed by an agent of the customer of the bank. In principle, the Quincecare duty could now arise where a non-corporate customer falls victim to an “authorised push payment” (APP) fraud. Continue Reading
Cryptoasset firms and sanctions
The FCA has stressed recently that it expects the cryptoasset sector to play its part in ensuring that Russian sanctions are complied with, and highlighted that the financial sanctions regulations do not differentiate between cryptoassets and other forms of assets.
The use of cryptoassets to breach or circumvent economic sanctions is a criminal offence under the Money Laundering Regulations 2017 and regulations made under the Sanctions and Anti-Money Laundering Act 2018; most notably the Russia (Sanctions) (EU Exit) Regulations 2019, as amended.
In addition to steps taken to identify customers and monitor transactions under the Money Laundering Regulations 2017, the financial sector, including the cryptoasset sector, will also need to implement additional sanctions specific controls as appropriate. Continue Reading
High-risk investments: FCA consults on strengthening financial promotion rules
The FCA perceives that since the start of the COVID-pandemic there has been a rapid growth in the proportion of consumers holding high‑risk investments. In response, the FCA is planning a revamp of the financial promotion regime, and has recently released its consultation paper on the proposed changes. Continue Reading
FCA consults on guidance for firms who seek to limit their liabilities
The Financial Conduct Authority has published proposed guidance on the use by firms of compromises to manage their liabilities. Compromises include arrangements with creditors and/or shareholders, such as Schemes of Arrangement, Part 26A Restructuring Plans, and Creditors Voluntary Arrangements (CVAs).
The Guidance is aimed at FCA-regulated firms that seek to limit their liabilities by using these company or insolvency law techniques. The Guidance warns that firms could face assertive action if proposals unfairly benefit them at the expense of their customers. Sarah Pritchard, Executive Director of Markets at the FCA, states:
“Under existing company and insolvency law, firms have options to limit their liabilities. When making use of these, they still have a responsibility to treat their customers fairly. We will take action against firms that don’t meet this obligation”.
The move comes in response to an increase in the number of firms developing proposals to deal with significant liabilities to consumers, particularly redress liabilities. Continue Reading
FCA stepping up competition law enforcement
The UK’s Financial Conduct Authority (FCA) is stepping up competition law enforcement in the financial sector, over which it has concurrent competition law enforcement powers alongside the Competition and Markets Authority (CMA). Continue Reading
