Regulation

UK Regulator Ends Half Its Money Laundering Probes Without Prosecuting

The United Kingdom’s financial regulator has closed the book on seven of 14 criminal investigations into the breach of money laundering rules, the Financial Times (FT) reported.

The Financial Conduct Authority (FCA), the London-based independent financial regulatory body, has discontinued half of its inquiries since January and has not prosecuted a single case despite a promise to use its full powers, FT reported.

Data released to FT revealed that five of the cases were criminal probes, while the other two investigations could have resulted in either criminal or civil action.

By discontinuing many of its criminal cases, the FCA has lost its chance to prosecute these companies under the money laundering regulations, which its director of enforcement said it was seeking last year, FT reported.

An FCA spokesperson told the publication that the regulator only brings prosecutions in the most egregious cases and pursues civil or regulatory sanctions in all others.

“The FCA has changed its approach so that it is now conducting investigations into suspected breaches of the money laundering regulations that might give rise to either criminal or civil proceedings,” the spokesperson said, according to FT. “The FCA’s approach is to make inquiries and assess the full nature of the matter under investigation before deciding on the most appropriate outcome.”

In a speech to lawyers and regulators, Mark Steward, director of enforcement and market oversight, said the FCA is investigating suspected breaches of the money laundering rules that might lead to either criminal or civil proceedings.

But other than impose fines, the agency has not brought a single court case, FT reported.

Still, Steward also said in the same speech that criminal prosecutions will be the exception.

“However, we need to enliven the jurisdiction if we want to ensure it is not a white elephant, and that is what we intend to do where we find strong evidence of egregiously poor systems and controls and what looks like actual money laundering,” he said.

In the wake of Wirecard’s collapse in July, the FCA introduced stronger measures to protect the users of payment cards and digital apps.

In June, Maha El Dimachki, head of payments for the FCA, told PYMNTS that social distancing and lockdown rules have accelerated electronic payments.

“It is important to note that reduction in financial crime, including all types of fraud, is a key priority for us at the FCA, and we will monitor the development of contactless cards as well as new innovations for the benefit [of] consumers,” she said.

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