A senior executive at Barclays has alleged money laundering and mis-selling failures at the bank’s French operations, casting a shadow over the British group’s plan to sell its business in France to a private equity group.

The Financial Times has seen a letter dated April 5 from Philippe Hébert, chief risk officer of Barclays France, to Tony Blanco, chief executive of Barclays France, alleging serious shortfalls in the bank’s standards of controls, compliance and conduct.

Mr Hébert says: “I am following up the message I sent you on March 3, regarding serious mismanagement at cashier level and the particularly poor handling of this situation by the various control services and lines of defence, even though it carries serious risks of money laundering, especially at branches already known to be at risk (such as Biarritz).”

The letter cites several cases of suspicious activity that Mr Hébert claims the bank has failed to take seriously enough. These include unusually high levels of repeated, large cash withdrawals by customers of just below the €10,000 limit at its Biarritz branch — on 38 occasions by one client — and the detention of staff in its Nantes branch by police on suspicion of money laundering.

Mr Hébert said elderly customers of Barclays France had regularly been mis-sold expensive products. He gives the example of a 97-year-old who was advised to put all his money into one of its Spirimmo life insurance products charging a 6 per cent annual fee. The bank paid €60,000 to settle a complaint by the client’s son, but no disciplinary action was taken against the staff responsible, Mr Hébert said.

The allegations are a blow to Barclays, which said last week it had entered exclusive talks to sell its French retail, wealth management and life insurance business to AnaCap Financial Partners, a UK-based private equity investor. The price to be paid for the operations, which includes 74 branches and about 1,000 staff, was not disclosed.

Mr Hébert’s warning about failings in its French operations came less than five months after Barclays was hit with a £72m record fine from the UK’s Financial Conduct Authority for lax anti-money-laundering controls around ultra-wealthy Qatari clients.

Barclays said in a statement: “We were already aware of these allegations. We are satisfied that the concerns were already identified and under investigation and action being taken in accordance with our standard processes. All relevant parties are aware.”

Two people familiar with the letter said AnaCap had been made aware of its contents and continued to pursue talks to buy the business. AnaCap declined to comment.

Mr Hébert, who did not respond to requests for comment, said in his letter that he would not feel comfortable reporting his findings to the groups doing due diligence on an acquisition of Barclays France and to the regulators. “To avoid being put in such a situation”, he said he was “determined to quit the company” under the same leaving conditions offered to other senior executives.

In his letter, he said that some clients withdrawing large sums of cash from its Biarritz branch were political opponents of countries under sanctions and in one case a member of a foreign royal family who had not been classified as a politically exposed person. He also alleged “African money laundering on a grand scale” at its Champs Elysées branch involving government officials as well as “internal fraud”.

He wrote: “Concerning anti-money laundering, the situation seems very different to the recent and favourable report of BIA [Barclays Internal Audit], a report that I obtained despite not being sent it, in contravention of governance rules.”

Source: Financial Times

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Happy birthday, the Queen! Many happy returns to our longest reigning monarch! Let’s hope you’re getting loads of birthday cards with cheques in them so you can buy something nice, paid into your account at Coutts – a bank recently fined by the US Department of Justice over tax avoidance.

Coutts – the royals’ bank of choice, owned by British taxpayers – was recently named in the “Panama Papers” for asking Mossack Fonseca to create offshore companies for its clients. Less well-known is that it recently paid a $78 million (£50 million) fine for helping ultra-rich clients evade tax by using Panamanian and other offshore structures. Coutts is a subsidiary of the Royal Bank of Scotland (RBS), which is mostly owned by the UK government, so the fine was largely paid by you and I, the UK taxpayers. Taxpayers are paying for tax avoidance.

Coutts were fined by the US Department of Justice at the end of 2015 because they “aided and assisted certain US clients with undeclared accounts at Coutts to evade their income taxes by placing their assets in the names of structures formed, maintained and managed by various subsidiary trust companies of Coutts”. However, a search shows that the huge fine was not reported by any British national newspapers. The US Department of Justice announced the fine on 23rd December and the news appears to have been lost in the Christmas period.

The Panama Papers show Coutts asked Panamanian lawyers Mossack Fonseca to create over 500 offshore companies for their clients. Coutts said that this didn’t mean they did wrong, as “The provision of trust and administration services is an entirely legitimate and key aspect of wealth management and succession planning.”

However, the US Department of Justice fined Coutts for precisely that kind of behaviour. The services Coutts offered included “the creation of foundations, trusts and companies incorporated or based in offshore locations such as the Bahamas, British Virgin Islands, Liechtenstein and Panama”.

The US authorities give examples, like the Coutts manager who “had three US clients with undeclared accounts held in the names of British Virgin Islands companies. These three accounts totalled approximately $130 million.”

Even after the 2008 bailout of RBS, when it became “majority-owned by the United Kingdom government”, US authorities say Coutts continued with their offshore offerings. The US Department of Justice says that “since August 2008, Coutts has accepted over $150 million in inflows from other Swiss banks that were being investigated by the department”. As well as taking on accounts from other Swiss banks, Coutts’ “relationship managers” travelled to the US to help their super-rich clients with offshore accounts. The US give another example, showing how “between July 2011 and April 2014, Coutts assisted a US client in transferring $33 million from an undeclared account held in the name of a Belize corporation to 11 other accounts at Coutts held in the names of nominee entities”, giving the US taxman the slip.

Coutts paid the £50 million penalty as part of the US Government’s “Swiss Bank Program”. The US gave Swiss Banks a chance to avoid a full criminal prosecution if they admitted they “had reason to believe that they had committed tax-related criminal offenses in connection”, gave the US full details of any US taxpayers involved and paid a fine.

RBS also paid German authorities £17 million to settle charges of tax evasion against their Coutts subsidiary in December 2015. Again, this is essentially British taxpayer’s money being paid to a foreign government because a bank we own helped the super-rich avoid tax.

Coutts are a central part of the British establishment. Founded in 1692, Coutts has long held the Queen of England’s account. The bank also has strong links with the Conservative Party. Throughout the period covered by the US and German fines, Coutts was run by David Douglas-Home, the only son of Tory Prime Minister Alec Douglas-Home. He sits in the Lords as a Conservative, under the name Earl Home. He was Coutts’ Chairman from 1999 to the end of 2013. Coutts is currently chaired by another Tory Lord, William Waldegrave, who was a Minister under both Thatcher and John Major. Waldegrave joined the Coutts board in December 2012. Douglas Hurd, another former Tory government minister, sat on the Coutts board from 1998 to December 2009, including a spell as Deputy Chairman.

I approached Coutts for comment, but they declined to respond.

The Financial Conduct Authority have now written to Coutts and the other banks named in the “Panama Papers” asking for details of their involvement with the law firm Mossack Fonseca. However, they are clearly far behind US and German authorities in looking at the bank’s involvement in tax avoidance.

Source: Vice

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The Bank of Italy is carrying out an on-site inspection at the Italian offices of Bank of China Ltd (601988.SS), a Chinese state-owned bank already facing accusations of aiding illicit money flows from Italy to China, a source familiar with the situation said.

Italian prosecutors are seeking to bring 297 people, mostly Chinese, as well as the Milan branch of Bank of China (3988.HK) to trial on charges of allegedly smuggling more than 4.5 billion euros ($5.12 billion) into China between 2006 and 2010. A judge in Florence is in the process of deciding whether they should be indicted and face a trial.

Part of the probe, code named ‘River of Money’, focuses on the relationship between Bank of China and defunct Chinese money transfer operator Money2Money, which used to dominate the market for Chinese remittances from Italy, a prosecutors’ document reviewed by Reuters shows.

The source said the supervisory inspection, which started a few days ago and is continuing, had been triggered by the judicial investigation in Florence. But the Bank of China (BoC) denied there was a link.

It confirmed that the inspection was taking place: “Bank of China is providing full cooperation to the Italian Supervisory Authority,” the bank said in written answers to questions from Reuters.

The Chinese bank said the inspection was a routine procedure, which takes place every three to five years and covers all business and management fields of the bank.

“It is not connected to the M2M (Money2Money) issue,” the Chinese bank said, declining to divulge further details given the ongoing nature of the inspection.

The Bank of Italy, which oversees banks and financial operators active in the country, declined to comment as it said supervisory activity was secret.

Shares in BoC, the Chinese bank with the biggest global footprint, were up 0.6 percent on Monday, compared with a 1.5 percent rise in the benchmark China stock index .CSI300.

SANCTIONS CAN BE TRIGGERED

On-site inspections are a powerful tool the Italian central bank uses to safeguard the integrity of the financial system and to prevent illegal practices, including money-laundering.

If management irregularities and regulatory violations are discovered in the course of off-site reviews and on-site inspections, sanction procedures are triggered against bank directors that could result in administrative penalties, mainly fines, the central bank says on its website.

In the request for the indictment, Italian prosecutors allege billions of dollars, including proceeds from counterfeiting, exploitation of illegal labor and tax evasion, were sent to China and split into small sums to avoid being detected.

Half of the amount allegedly smuggled, or 2.2 billion euros, was sent via BoC’s Milan branch, the request says.

Bank of China has consistently denied any wrongdoing.

Between 2008 and 2009, the Bank of Italy’s financial intelligence unit (UIF), which fights money laundering and the financing of terrorism, had identified hundreds of suspicious transactions from Italy into China that were carried out by Money2Money, the Bank of Italy told Reuters.

Some went through Bank of China but the Bank of Italy did not impose sanctions on Bank of China’s directors at the time.

UIF sent all relevant details to prosecutors in Florence in 2011 and 2012, the Bank of Italy said.

In 2011, UIF carried out an on-site inspection at Bank of China’s Italian offices and fined two bank employees “for failure to transmit suspicious transactions,” the Bank of Italy told Reuters.

Bank of China immediately appealed and the result of that is still pending, the Chinese bank says.

It said the penalties do not refer to violations of anti-money laundering legislation, but to the bank governance.

The Chinese underground economy in Tuscany was brought into focus in 2013 when a fire killed seven workers in their sleep at a workshop in Prato, center of a network of often-illegal garment workshops.

Source: Reuters

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Speaking on Thursday in Bern, FINMA’s CEO Mark Branson said although money laundering is a global problem, Switzerland is particularly susceptible. As the largest financial centre in the world that has built a business around managing wealth for private clients, it is “naturally exposed to a greater risk” in terms of money laundering, he said.

The current Panama Papers scandal has shone a light on the easy flow of money into offshore accounts, whether this is part of a legal setup or not.

FINMA is now putting banks into categories based on how many clients they have with offshore accounts. This is an indication of “how high the bank’s money laundering risk rating is”, said Branson. There are 14 Swiss banks which currently have a red rating. “We are taking action at each of these institutions,” he said.

In terms of the type of action the regulatory body can take, measures such as three-year bans for new relationships with politically exposed persons (PEPs), the repayment of illegally generated profits, new members for the board of directors and imposing bans on senior bank managers, are all steps FINMA has ordered at banks in recent years.

Enforcement needed
In 2015, there were 29 institutions in Switzerland that were investigated on suspicion of breaking anti-money laundering rules, though not all led to the regulators taking action.

Branson also spoke about two major ongoing corruption cases involving Swiss banks – the Brazillian Petrobas scandal and the 1MDB Malaysian sovereign fund case. FINMA has investigated over 20 banks in the course of its action taken in these cases. Seven enforcement proceedings have begun against financial institutions as a result.

“There are concrete indications that the measures those banks had in place to combat money laundering were inadequate,” said Branson, adding that he was aware that problems of this nature existed in banks outside of Switzerland too. In terms of tackling the issue, Branson said it was not new regulation that was needed, but that existing rules had to be “applied systematically and consistently”.

Media driven reporting
One area that banks could improve on is timely reporting of suspicious activity, Branson added. Too often, banks wait until problems become public before alerting the authorities, he said.

“Banks must be readier to file a report as soon as they have concrete suspicions and not wait until the media has taken up the scandal,” he said.

In 2014 (the latest available figures) Switzerland’s Money Laundering Reporting Office (MROS) received 1,753 reports of suspicious activities – 28% of those were in response to a newspaper article.

The number of reports is increasing (up 25% on 2013), but still lags far behind the likes of Britain (350,000), Hong Kong and Singapore (30,000) where demands on reporting are more stringent.

Source: Swiss Info.

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France is tightening its anti-corruption laws to clean up its image after several French companies were slapped with huge fines abroad, with planned reforms including greater protection for whistleblowers and a new anti-corruption agency.

Two years ago, France’s biggest bank, BNP Paribas (BNPP.PA), was fined $9 billion (6.3 billion pounds) by U.S. authorities over violations of sanctions against Sudan, Cuba and Iran.

French engineering company Alstom (ALSO.PA) and oil groups Total (TOTF.PA) and Technip (TECF.PA) were also forced to pay millions of dollars to the U.S. authorities over bribery allegations.

French Finance Minister Michel Sapin will unveil the new bill to the cabinet on Wednesday, before sending it to parliament for discussion.

“We are badly ranked internationally, we’re under suspicion,” Sapin told France Inter radio on Tuesday.

“So we must wash away this suspicion and for that we need strong measures,” he said.

The bill will also include the creation of a government-wide registry of lobbyists and a ban on “large” gifts to government officials, officials at the finance ministry said.

France was ranked 23rd in Transparency International’s latest corruption perception index, below Germany, Britain and the United States, and was criticised by the Organisation for Economic Co-operation and Development (OECD) in 2014.

“To this day, no French company has yet been convicted for foreign bribery in France, whereas French companies have been convicted abroad for that offence,” the OECD said then, adding that it was concerned by France’s “lack of proactivity”.

Alstom was sentenced to pay a $772 million fine by a U.S. judge last year, the largest levied by the U.S. government in a foreign bribery case.

Total and Technip also agreed in recent years to pay millions of dollar to U.S. authorities to settle allegations of bribery of foreign officials.

“This is shocking, and almost insulting for our judiciary system,” said Sapin, who passed a first series of anti-bribery measures under a previous Socialist government in 1993.

By giving French judges a more efficient framework to crack down on bribery, French officials are also hoping to avoid future cases of French firms being forced by courts to allow monitors reporting to foreign governments into their operation, as was the case with BNP Paribas.

The government dropped an earlier plan to introduce the possibility for companies to plead guilty in exchange for a financial settlement, meant to bypass lengthy legal procedures, after France’s highest administrative court advised against it, Sapin said.

Source: Reuters

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Misconduct fines, compensation and related legal costs will constrain the biggest UK banks’ profitability for at least another two years, according to fresh research that underscores the effect of a series of scandals that have tarnished the reputation of the City.

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Litigation and misconduct charges soared 40 per cent to £15bn in 2015 compared with a year earlier, according to a report published on Tuesday by Moody’s, with the payment-protection insurance debacle weighing most heavily on the balance sheets of the UK’s five biggest banks. Last year alone, the five banks booked an additional PPI provisions of £7.6bn, an increase of 51 per cent compared with 2014, the report shows.

A 2018 deadline that is expected to be imposed by the Financial Conduct Authority this year on PPI claims also accounts for the credit rating agency’s gloomy outlook, with a forecast of a surge of fresh customer mis-selling claims within the two-year window. However, Moody’s estimates that PPI provisions will hit profitability “to a lesser extent than in 2015”.

“This significant increase [in charges] in 2015, despite some decline in 2013 and 2014, demonstrates that these charges continue to present considerable tail risk,” said Laurie Mayers, an associate managing director at Moody’s.

The report comes amid a wider debate about the correct level of regulation in the UK. Politicians have raised concerns that the FCA may have softened its approach since the Conservative victory at last year’s general election and the subsequent ousting of the regulator’s chief executive by the Treasury.

John McFarlane, the chairman of Barclays, this month sparked criticism from politicians for grumbling over the size of fines his bank has had to pay — such as the $2.5bn to settle investigations into the attempted manipulation of foreign-exchange benchmarks — which he claimed were “not proportionate”.

Barclays’ profits have been hit over the past few years by the fines and legal costs it has had to pay out, including as a result of the Libor and forex investigations — the bank held out in the latter until last year.

Barclays, along with Lloyds Banking Group, have had to put aside the most in relation to PPI, with £2.2bn and £4bn respectively in 2015 alone.

There is some evidence that misconduct fines weigh on lending: the Bank of England estimates that the $150bn of fines levied on global banks over the past five years translates into more than $3tn of reduced lending capacity. The $150bn is roughly the same as the amount by which banks have had to bolster their balance sheets over the same period.

Andrew Bailey, a BoE deputy governor — who will lead the FCA from this summer — said in 2014 that authorities in the US and elsewhere should consult regulators before imposing their fines. He said too-heavy penalties can have “real or potentially negative effects on the safety and soundness of the firms we regulate”.

Beyond the UK, Moody’s said on Monday night that it could downgrade the credit ratings of Deutsche Bank — which has some of the highest misconduct and litigation charges — because of “the rising execution hurdles facing Deutsche in its efforts to strengthen and stabilise profitability over the next three years”.

John Cryan, the German lender’s chief executive, said last week that the bank could make a small loss this year, and Moody’s noted that the bank’s core capital markets business had endured a weak January and February.

“Since changing leadership last June and recalibrating its strategic plan last November, the operating environment has worsened for Deutsche Bank. This is increasing the already high level of execution challenges the group faces in addressing its structural cost issues and achieving its new strategic plan,” the credit rating agency said.

“The scale of the firm’s re-engineering task, the potential for further weak revenue, and the risk of incremental litigation charges also create uncertainty, further increasing the execution challenge.”

Source: Financial Times

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Under the Proceeds of Crime Act 2002 (‘POCA’), a person is required to submit a SAR where they have knowledge or suspicion that someone is engaged in money laundering. When submitting the SAR, the reporter will sometimes request the consent of the NCA to undertake an activity which the reporter suspects may constitute money laundering. This gives them a defence against prosecution in relation to that transaction and if consent is granted, allows them to carry on business as usual.

Reporting statistics

In total 381,882 SARs were received by the NCA in the 14/15 reporting year. This included 14,672 consent SARs, of which 9.4% were initially refused. An additional 12.5% of requests were closed due to them being withdrawn, submitted in error, or lacking sufficient information for the request to be processed.

The banking sector made 83.39% of all SARs, accountants and tax advisors made 1.21%, legal professionals 1%, and estate agents only .09%. Despite this, 17.8% of all consent SARs came from legal professionals.

Though the number of SARs increased by 7.82%, the total funds restrained as a result of the reports dropped by £98,438,324 to £43,079,328. The report states that this is due to the previous year’s figure being skewed by five large cases with a cumulative value of £119 million.

During the reporting period 1,899 SARs were disseminated to the National Terrorist Financial Investigation Unit and Counter Terrorist Units, an increase of 42% on the same period in the previous year.The average turnaround time for responses to reporters was 4.7 days, an increase from 4.3 days in the previous year. A small number of SARs are still received in paper rather than electronic format, which leads to delays, as the UKFIU is then required to manually input them on the database before they are processed.

Regulator access to SARs

During the reporting period, the UKFIU approached anti money laundering (‘AML’) supervisors and regulators to ascertain whether they had any interest in accessing SARs directly. Surprisingly the report states that regulators did not want direct access, but simply better information from the SAR regime. As part of a trial the HMRC AML team was given direct access to SARs, but this is not a major change, given that HMRC already had direct access as part of its law enforcement capability. However, the fact that this trial went ahead despite the lack of appetite from regulators, could indicate the UKFIU’s desire to increase the use of direct access in future.

SAR confidentiality

During this reporting period, there have been three formal allegations of breaches of confidentiality. The first involved the reporter of a SAR being mentioned in a media article. The second breach occurred when a foreign financial intelligence unit inadvertently tipped off the subject of the SAR. The final allegation related to a law enforcement agency disclosing the existence and content of a SAR. An investigation into a further breach was on-going at the end of the reporting period. If direct access to SARs is extended, so to might concerns regarding confidentiality.

Conclusion

The figures show an improvement on reporting statistics in the majority of categories in the last year. However, there is clearly still a lot of room for improvement, particularly amongst the legal, estate agent and accounting sectors.

Source: Lexology

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On March 3, 2015, the Economic Secretary to the Treasury Andrea Leadsom, stated: “A key part of our long term economic plan is to restore trust in Britain’s banking sector so that it works much better for customers and businesses. Ensuring that our banks are properly run is vital for the health of our economy.”

The 2007-08 financial crisis and more recent events – such as the Libor scandal – have indeed highlighted concerns about the performance and behaviour of many of the individuals working in the financial services industry.

Government and regulators work together to assure the “health of the economy”

The Parliamentary Commission on Banking Standards was established in 2012 to consider the professional standards and culture of the UK banking sector. It concluded that “a lack of accountability contributed to the mismanagement of the key risks and led to public distrust in the industry,” as reported by Deloitte’s EMEA Centre for Regulatory Strategy.

It was believed that all too often it was the shareholders of financial institutions who suffered, rather than the senior individuals who are responsible for the firm discharging its regulatory obligations.

The FSA, the predecessor of the current FCA, garnered fierce criticism for its apparent inability to sanction those individuals responsible for the misfortunes that beset the UK’s largest firms during the financial crisis.

The goal of the FSA, therefore, is to make it easier for enforcement action to be taken against the individuals at the top who are found to have breached the regulators’ rulebook, replacing the complex and oftentimes confusing Approved Persons regime.

Terry Sahathevan, director at Medius Consulting, a London-based regulatory consultancy, explains that, “it is a sign that governments in the public are fed up with business people doing things wrong. It’s the cost of not having things being worse again”.

From APR to SM&CR: Expanding the scope

Calling for a more rigorous, comprehensive, and consistent approach across the financial services industry, the application of the regime beyond banking seemed necessary. According to HM Treasury, “many firms beyond the banking sector – such as large investment firms, insurers and those involved in shadow banking – can pose a threat to financial stability.”

With the belief that holding individuals accountable is a key component of effective regulation, the tough new regime for senior banking executives and managers came into effect on March 7. It will extend to other financial firms in 2018.

The table below indicates the numbers of firms and individuals subject to the APR and SM&CR.

While the SMR includes about 20 senior manager positions, the certification regime will also apply to individuals who are not carrying out Senior Managers Functions (SMFs) but whose roles have been deemed capable of causing significant harm to the firm or its customers by the regulators. In other words, these individuals, deemed “certified persons”, have the ability to wreak significant financial damage.

Individual accountability at the heart of UK’s corporate criminal liability

In fact, the FCA’s new rules are coherent with the evolution of the British judiciary system. SM&CR is just one step forward in embedding a culture of personal responsibility throughout the financial services industry.

England has recognised this for decades now. Indeed, this principle was famously elucidated in the British legal case of Kent and Sussex Contractors Ltd (dating back to 1944). In that case, the judge argued that such people are so close to the “very ego and centre” of the personality of the corporation that their actions should be identified with it.

This was, however, at odds with the current legal accountability framework. According to the International Financial Law Review, a key problem identified as the cause of the FSA’s difficulties was the evidential challenge of having to illustrate that a particular individual was personally responsible for the firm’s regulatory failings. Collective responsibility made it difficult to take action against an individual, no matter how senior.

That is why new requirements creating a responsibilities map for each financial institutions and requiring every Senior Manager to sign a Statement of Responsibilities might soon clarify liability.

Indeed, recent legislative changes to the regulatory regime for UK financial services firms reaffirm Britain’s culture of compliance and its ability to adapt to economic development and contemporary challenges.

Even though some point to watered down rules, this major reform is being carefully watched by financial services regulators outside the UK, particularly in the U.S. and Hong Kong, which may enact similar laws. Its impact might yet reverberate well beyond Britain.

Source: Global Risk Insights

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Europe’s biggest banks will need billions of dollars to meet collateral requirements for derivatives starting this year under the latest version of a key rule that seeks to reduce risk.

The standards, which will be phased in from September, may require EU buyers and sellers of swaps to set aside between 200 billion euros ($220.5 billion) and 420 billion euros in total once they are fully effective in 2020, three European regulators said on Tuesday in final draft standards. The requirement aims to stiffen standards for swaps contracted directly between traders rather than being settled at clearinghouses.

“The challenge now will be for the industry to implement the rules in time for the September 2016 start date -– just six months away,” Scott O’Malia, chief executive of the International Swaps and Derivatives Association, said in a statement after the rules were published. It’s a “tight time frame” to comply with the requirements, he said.

After the 2008 credit crisis, regulators around the world pledged to increase the amount of securities, cash and other collateral backstopping trades in the $553 trillion global swaps market. The extra collateral is meant to protect against the threat that the default of one trader spreads risk to others and potentially throughout the financial system.

The financial industry must revise thousands of legal documents, test technology and put in place procedures for exchanging collateral, according to O’Malia. The standards must still be approved by the European Commission, the bloc’s executive arm.

“The overall reduction of systemic risk and the promotion of central clearing are identified as the main benefits of this framework,” the European Banking Authority, European Securities and Markets Authority and European Insurance and Occupational Pensions Authority said in the document.

While regulators have been putting in place separate rules that require many commonly traded interest-rate, credit and other swaps to be settled at clearinghouses owned by LCH. Clearnet Group Ltd., Intercontinental Exchange Inc. and CME Group Inc., a portion of the swap market is still expected to take place directly between buyers and sellers in over-the-counter transactions.

The standards impose a new EU requirement for banks such as JPMorgan Chase & Co. and Barclays Plc to exchange initial margin, or collateral, at the beginning of transactions to cover the potential future losses stemming from a counterparty’s default. Currently, traders primarily exchange collateral daily or during the life of the contract to protect against swings in the market value of a transaction, rather than as a trade is initiated.

The Basel Committee on Banking Supervision, which laid out a global framework for the requirements, estimated that at least 700 billion euros ($771 billion) might be needed to meet the initial margin standards. U.S. banking regulators led by the Federal Reserve estimated last year that the rules could require firms in the U.S. to have $315 billion in initial margin.

The actual cost of financing collateral would be smaller, though the Federal Reserve still estimated it could cost lenders billions of dollars each year. The collateral requirements could decrease significantly as new rules push traders to settle more trades at clearinghouses.

Using clearinghouses would typically wind up being cheaper, encouraging the move. A 2014 Deloitte study showed that the incremental collateral, capital and compliance costs of using non-cleared trades would be more than 10 times that of clearing.

Source: Bloomberg

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HM Revenue & Customs has been debarred from a dispute with law school owner BPP Holdings after the Court of Appeal criticised the revenue for suggesting it should be treated like a litigant in person to excuse its failure to comply with a tribunal order.

Ruling in BPP Holdings vs Revenue and Customs, the senior president of tribunals, Lord Justice Ryder, described HMRC’s approach to compliance as ‘disturbing’.

He said: ‘At times it came close to arguing that HMRC, as a state agency, should be treated like a litigant in person and that the constraints of austerity on an agency like HMRC should in some way excuse unacceptable behaviour.

‘I remind HMRC that […] a litigant in person is expected to comply with rules and orders and a state party should neither expect to, nor work on the basis that it has some preferred status – it does not.’

The dispute arose after HMRC breached an order made by the First-tier Tribunal (Tax Chamber), which required it to give particulars of its case against BPP, which owns BPP Law School, over how it pays VAT on its supply of education and printed matter.

The order was made after HMRC delayed serving its statement of case and failed to plead the facts of its case.

At the time the tribunal judge, Judge Mosedale, said there was ‘clear prejudice’ in BPP not knowing HMRC’s case, and that it delayed the progress of the appeal by around eight months.

The case progressed to the Court of Appeal after the Upper Tribunal (Tax and Chancery Chamber) ruled the First-tier Tribunal had made an error in law and should not have debarred HMRC, as it said the tribunal gave non-compliance a ‘disproportionately prominent role’ in its decision.

In the appeal court, HMRC said the First-tier Tribunal should have considered an alternative remedy rather than barring it from the case, which HMRC said prevented a fair hearing, and handed BPP a windfall to which BPP was not entitled.

But Ryder said that a more relaxed approach to compliance with directions of the tribunals ‘would run the risk’ that non-compliance with orders would have to be tolerated, which he described as the ‘wrong starting point’.

He said: ‘The interests of justice are not just in terms of the effect on the parties in a particular case but also the impact of the non-compliance on the wider system including the time expended by the tribunal in getting HMRC to comply with a procedural obligation.’

He added that not only was there no reason for the non-compliance, but as a consequence BPP was prejudiced against due to the delay and expense. He said this meant non-compliance was not the only factor that led to HMRC being disbarred.

Ryder ruled that the debarring order should be restored. Lord Justice Richards and Lord Justice Moore-Bick agreed.

Source: Law Gazette

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Britain’s biggest bank is still being used by criminals – almost four years after it was fined £1.1billion for money laundering.

HSBC yesterday revealed that an independent ‘monitor’ installed by the US government had flagged up ‘significant concerns about the pace of progress’ fighting crime.

In the worst case scenario, the bank could now face restrictions on its ability to process US dollar payments through America or could even lose its banking licence in the US.

The damning revelations – contained in the high street giant’s annual report – emerged days after its involvement in a murky deal between the corrupt Maldives government and Cherie Blair was exposed by the Daily Mail.

MPs have called for an investigation into HSBC, and suggested that the payment should have been blocked by its anti-money laundering systems.
HSBC – the bank used by Mrs Blair’s law firm Omnia Strategy – accepted a £210,000 payment from a suspected conman and terrorist for its work for the Maldives’ autocratic president, Abdulla Yameen.

The transaction, which landed in Omnia Strategy’s HSBC bank account last September, was routed via a clothing import export business in Male, the Maldives capital.

HSBC said the monitor – former New York prosecutor Michael Cherkasky – had found ‘instances of potential financial crime’ and ‘deficiencies’ in systems set up by the bank to combat money laundering and other wrongdoing.

The bank confirmed that Mr Cherkasky had also refused to sign off on its efforts to improve compliance and raised concerns over whether it can clean up its act within the five-year target set by US authorities.

The lender caused further anger as it announced that it made a £13.2billion profit last year and dished out £2.4billion in bonuses to staff.

Some 453 staff around the world received more than 1million euros – £780,000 – including HSBC’s chief executive Stuart Gulliver, who received a £7.3million pay package.

One MP said last night that Mr Cherkasky’s conclusion that HSBC had not done enough to tackle financial crime suggests the apparent lapse with Mrs Blair may be symptomatic of a wider problem.

John Mann, a Labour member of the Treasury Select Committee said: ‘This clearly shows HSBC has failed to sort itself out. Accepting a suspicious payment from the Maldives would appear to reflect wider failings in the business. HSBC should be replacing people rather than paying huge bonuses.’

HSBC was fined £1.1billion in the US in 2012 after being caught laundering billions of pounds for Mexican drugs cartels and rogue states.

Its systems were so lax that US lawmakers said the lender became the ‘bank of choice’ for drug dealers. As part of the settlement with the US government, HSBC entered a five-year ‘deferred prosecution agreement’.

The deal stipulated that criminal charges would be dropped after five years if HSBC introduced tougher anti-money laundering controls and committed no further offences. Mr Cherkasky was installed in the bank’s offices to monitor its progress.

HSBC bosses yesterday stressed that they are installing tougher anti-money laundering systems this year. Mr Gulliver said there is ‘no evidence of bad apples or bad actors in HSBC’, adding: ‘We have 47million customers in 71 countries – this is a multi-year journey.’

The latest scandal to hit HSBC is a US inquiry over its hiring of people with links to government officials in Asia, known as ‘princelings’.

It is also facing criminal investigations around the world into helping wealthy clients dodge tax in Swiss bank accounts and offshore trusts, and has been caught up in the bribery probe into world football’s governing body FIFA.

Fionn Travers-Smith, of campaign group Move Your Money, said: ‘The bank has faced no repercussions from the Government or the supine regulator for designing and abetting illegal tax evasion, and now its executives are pocketing huge wads of cash as a reward.’

HSBC last week said it will keep its headquarters in London after threatening to leave over tougher regulation and higher taxes.

Source: Daily Mail

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Spanish police have arrested five directors of Industrial and Commercial Bank of China (ICBC) after they raided the lender’s Madrid offices as part of an investigation into alleged money laundering.

China’s large state-owned lenders have been dogged by allegations of improper conduct as they expand abroad and the probe into ICBC by police, the Spanish tax agency and Europol involves funds handled by a criminal group which the Interior Ministry says passed through the bank and were transferred to China.

Over 100 police were involved in the operation, which saw the arrest of five ICBC directors, Europol said in a statement on Wednesday.

A Beijing-based spokesman for ICBC, China’s largest bank in terms of assets, said its Madrid branch was cooperating with the investigation. “Strictly implementing anti-money laundering regulations, and strictly operating within the law and regulations have always been our fundamental operation and management principles,” the spokesman added.

The Chinese embassy in Spain also said it currently had no reason to believe ICBC had been breaking the law, adding that it had not received official notification about the case from the Spanish authorities.

At a briefing, Chinese Foreign Ministry spokesman Hong Lei said the government hoped Spain handled the situation “justly and according to law, effectively guaranteeing the legal rights and interests of Chinese organisations and personnel”.

The probe into ICBC follows a slew of allegations of money laundering levied against other Chinese banks.

Last June, prosecutors in Italy asked Bank of China’s (BoC) Milan branch to be tried for smuggling among other alleged crimes and a month later, the U.S. Federal Reserve told China Construction Bank Corp to address deficiencies in money laundering compliance.

NOT THE WORST OFFENDERS

Such probes could mar the reputation of these banks as they expand abroad, primarily to cater to the growing presence of Chinese firms, bankers at overseas branches of the lenders said.

“We haven’t been abroad for long, so this has an impact on all of us,” said a banker at a London branch of a top-four Chinese lender.

Analysts, however, said Chinese banks are not necessarily the worst offenders when compared to their global peers.

“If you look at the fines globally, which firms have been fined the most in terms of anti-money laundering, you wouldn’t find the Chinese banks near the top of that list although some have been asked to tighten procedures,” said Mark Wightman, a partner in the wealth and asset management at Ernst & Young.

For example, HSBC agreed in June last year to pay Geneva authorities US$43 million to settle a money laundering investigation at its Swiss private bank.

Wightman also added that conditions are likely to get tougher for all banks as the Common Reporting Standards (CRS), a global tax residency rule, come into effect this year.

“Everyone will be looking at their client bases in a lot more detail as they have to store info on client tax residency as well, and manage any potential challenges to that, so that’s another question the banks are struggling with,” he said.

(US$1 = 0.8988 euros)

(Reporting by Emma Pinedo in MADRID, Shu Zhang and Michael Martina in BEIJING and Engen Tham in SHANGHAI; Additional reporting by Anthony Deutsch in AMSTERDAM and Adam Jourdan in SHANGHAI; Writing by Paul Day, Angus Berwick and Ryan Woo; Editing by Stephen Coates and Miral Fahmy)

Source: Channel News Asia

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The Madrid branch of the Industrial and Commercial Bank of China (ICBC) has informed the Chinese Embassy in Spain that the bank used the latest anti-money laundering system provided by Spanish authorities to control capital, the embassy said in a statement Friday.

This is the second statement from the Chinese embassy following the Wednesday raid of the ICBC Madrid branch by Spanish police over the bank’s alleged weak supervision of suspected money laundering. During the raid, five ICBC employees were taken to Spanish police custody for investigation.

“ICBC has been actively dedicated to promoting economic cooperation between the two nations, and continued to provide financing services for investment projects in Spain, which amounted to more than 1 billion euros, ” the embassy statement said, adding, “the bank has made an active contribution to the economic and social development in Spain.”

The Spanish police claimed the investigation was “still in a phase of secrecy,” and wouldn’t provide more details, according to the embassy statement.

“The Chinese government demands that Chinese companies strictly follow the law, both of China and in the country where they are accredited. We are informed by the ICBC office in Madrid that it used the latest anti-money laundering system provided by Spanish authorities to control capital,” the statement added.

The Chinese embassy said the person responsible for ICBC on a European level arrived in Madrid on Wednesday to offer assistance to the Madrid branch.

In its Friday statement, the embassy also urged the Spanish side to deal with the issue justly while protecting the legitimate rights and interests of Chinese companies and personnel.

The ICBC Madrid branch has already resumed normal operation, the statement added.

The five ICBC employees reportedly appeared in court on Friday to answer charges of tax avoidance and money laundering in the town of Parla, just south of the capital.

Source: China Daily

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Beijing urged Spain to “safeguard the legal rights and interests” of employees of megabank ICBC, following their arrest on suspicion of laundering tens of millions of euros.

Police searched the Madrid branch of ICBC on Wednesday, arresting five of its directors as part of a probe into the suspected laundering of at least 40 million euros (HK$345 million).

“We hope that the Spanish side would deal with the relevant issue in accordance with the law and honestly safeguard the legal rights and interests of Chinese companies,” foreign ministry spokesman Hong Lei said yesterday.

A spokesman for the bank in Beijing said its Madrid branch will actively cooperate with the investigation, saying the bank “strictly implements anti-money laundering provisions” and operates in compliance with regulations.

He added that the bank’s Europe-based lawyers have rushed to Madrid in response to the investigation.

The bank is suspected of allowing funds earned through the alleged crimes of smuggling, tax fraud and labor exploitation to be transferred “to China in a way that appeared legal,” Spanish police said.

“Spain has become an important destination of investment from Chinese companies and financial institutions,” Hong said, calling on the country to “safeguard the sound state” of the relationship.

Spanish police said the raid was a follow-up to an operation carried out last year that targeted Madrid-based Chinese gangs suspected of importing huge amounts of goods from China without declaring them on customs forms to avoid import and tax duties.

The crime groups allegedly deposited their illicit proceeds into ICBC accounts, with the lender accused of sending the funds to China without checking their origin as required by law.

ICBC is not the first Chinese bank embroiled in controversy over money-laundering overseas.

Last June, Italian prosecutors alleged that the Bank of China was involved in illegal transfers of large sums of money out of the country.

A month later the US Federal Reserve faulted China Construction Bank for weaknesses in its anti- money-laundering program.

ICBC is the world’s largest bank by market capitalization.

It entered the Spanish market in January 2011 with the inauguration of its branch in Madrid.

More than 190,000 Chinese nationals legally live in Spain, national statistics institute INE said.

Source: The Standard

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The rumor of an imminent collapse of Deutsche Bank (DB) has spread panic. The “reassuring” message on Monday that the bank’s “2016 payment capacity is estimated to be approximately €1 bn euros” was seen as an invitation to short-sell.

The Bank’s stock was short-sold and lost 10% on Monday, and then 5% on Tuesday. There was a rebound on Wednesday, and then again the stock tumbled again by 5,8% on Thursday.

Bottom line: Deutsche has lost 40% of its value since the beginning of 2016 and it is fair to say something is seriously wrong. It all started when the bank announced 2015 annual earnings report and it did not look good. In fact, it was the worse report in seven years with net losses of €6,8bn.

Credit rating agencies are not trusting DB as much as the German economy. In June 2015, Standard and Poors lowered DB ratings to BBB+, which is still investment grade but now comparable to Lehman Brothers before its collapse (lower in fact).

That is is strong assurances started to be voiced. The executive Director of the Bank, John Cryan, was assuring Bank employees on Tuesday that the bank is “rock solid” and the German Finance Minister, Schaeuble, was saying that “I have no concerns about Deutsche Bank.”

Markets interpreted the German Minister’s statement as a “whatever it takes.” The former executive of Morgan Stanley, John Mack, told Bloomberg on Wednesday “there’s no question in my mind, it is absolutely good for every penny.”

There are several reasons why the DB would be in trouble.

In April 2015, the Bank was fined $2,5bn for its role in manipulating the Libor interbank offered rate; and it set $1,5bn on reserve to pay for anticipated costs. In time, the “setting aside” became €5,5bn. Thus the year closed with over €8 bn in litigation costs.

Then came news of Chinese growth deceleration, the collapse of the commodities market and the tumbling of oil prices, which were not good for DB’s investment banking arm, especially because of its exposure in the derivatives market. The bank has a €9,6 trillion exposure in government bonds and is seating on trillions of derivative bets that are multiple times over the size of the German GDP.

As with every bank, the danger does not stem merely by the direct exposure of investors, but also their networking effect. The interconnection with other financial institutions and the state is rarely transparent or easy to risk assess.

Bailing out DB could bring Germany’s debt-to-GDP to skyrocket, if at all possible given new financial regulation on bail-ins.

And the bank’s traditional role is to help German exports, in the economy that is traditionally seen as Europe’s engine. If DB goes down, the consequences would be European, not German alone.

Source: Neurope

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The global banking behemoth HSBC has decided to keep its headquarters in the British capital after flirting with the idea of a move to Hong Kong amid concerns over tougher regulations and higher taxes in the U.K.

After a 10-month review, the HSBC board unanimously voted to stay in London, concluding that the U.K. remains “an important and globally connected economy,” the bank said in a statement Sunday.

“It has an internationally respected regulatory framework and legal system, and immense experience in handling complex international affairs … [and is] home to a large pool of highly skilled, international talent,” HSBC said.

The U.K. government can breathe a sigh of relief, as HSBC’s decision was widely seen as a test of London’s enduring status as an international financial center.

When HSBC announced in April that it would consider leaving the U.K., the British economy was growing strongly. But executives were concerned a May election could result in a more hostile environment for companies, or put the country’s membership in the European Union at risk.

At the time, the opposition Labour Party had announced plans to take banking regulation even further. But Prime Minister David Cameron’s Conservative Party won the election, keeping the political climate more in favor of businesses.

The big question over the U.K.’s future in the European Union remains, however, with Cameron having promised to hold a referendum on the issue by the end of next year.

Moving to Hong Kong would have been a homecoming of sorts for HSBC — the bank was founded in the city while it was a British colony. In 1992, the bank relocated its headquarters to the U.K., after buying Midland Bank.

The importance of HSBC’s Asia business — particularly in China — has also risen significantly over the years, accounting for 80% of the bank’s profit. It made $12 billion in Asia in 2014, compared with a loss of $257 million in Europe.

Hong Kong also offered the appeal of lower corporate taxes and less strict banking regulations than the U.K.

But HSBC’s review found that “the combination of our strategic focus on Asia and maintaining our hub in one of the world’s leading international financial centers, London, was not only compatible, but offered the best outcome for our customers and shareholders,” said Douglas Flint, the group’s chairman.

Despite the bank’s decision to remain in the U.K., it reiterated that Asia “remains at the heart” of its strategy.

Hong Kong authorities said they respected the bank’s decision.

“For a large international bank such as HSBC, relocation of domicile is a very major and complicated undertaking,” said Hong Kong Monetary Authority chief executive Norman Chan.

HSBC said it has now decided to stop reviewing the location of its headquarters every three years and will “only revisit the matter if there is a material change in circumstances.”

Source: KSPR

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The UK-based bank has been accused of not making it clear to its clients that particularly aggressive traders, known as high frequency traders, were using the private platform.

“Dark pool” trading operations allow investors to trade large blocks of shares but keep the price private.

The bank declined to comment.

A formal announcement, including a settlement with Credit Suisse also over dark pool trading, is expected on Monday from the New York Attorney General (NYAG) and the Securities and Exchange Commission (SEC).

As well as the fine, Barclays is expected to admit to having broken the law and will agree to install an independent monitor to conduct a review of its electronic trading business, according to the NYAG.

‘Significant role’
Credit Suisse is likely to pay a penalty of $84.3m but will neither admit or deny any wrongdoing.

“These cases mark the first major victory in the fight against fraud in dark pool trading that began when we first sued Barclays,” said Eric Schneiderman, the New York attorney general.

He added that “co-ordinated and aggressive government action” had led to “admissions of wrongdoing, and meaningful reforms to protect investors from predatory, high-frequency traders”.

“We will continue to take the fight to those who aim to rig the system and those who look the other way.”

Meanwhile Andrew Ceresney, director of the SEC’s enforcement division said: “Dark pools have a significant role in today’s equity marketplace, and the firms that run these venues must ensure that they do not make misstatements to subscribers about their material operations.”

Barclays lost an attempt to have the case dismissed last year.

Source: BBC

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The United Kingdom’s Modern Slavery Act is now in force. The International Labour Organization estimates there are nearly 12 million people in forced labour across Asia. This article sets out seven things you need to know to protect your business.

1. The Modern Slavery Act has global coverage

Businesses with UK operations will have an obligation to publish an annual slavery and human trafficking statement (Annual Statement) from next financial year.

This obligation will apply to any business that: is a corporation or a partnership; supplies good or services; carries on any of its business, trade or profession in any part of the UK; and has a total, global turnover of at least £36 million.

The upshot is that the Modern Slavery Act has global coverage – that is, where the business has a nexus with the UK, then its activities globally are within scope.

Further details of the requirements are set out in our detailed publication relating to the Modern Slavery Act on 12 January 2016 (Detailed KWM Synopsis). Theoretically, businesses can comply with this obligation by stating that no steps were taken to ensure that slavery and human trafficking is not taking place. However, there are reputational risks arising from this course of action.

Slavery and human trafficking offences

In addition, the Modern Slavery Act also criminalises slavery even where the offence is committed by a non-UK national and outside of the UK.

It also provides that a person can still be held liable for slavery under the Modern Slavery Act if they were in a position to know that slavery was occurring, but lacked actual knowledge of it. The Modern Slavery Act imposes further obligations on UK nationals, as the Modern Slavery Act’s human trafficking offence applies to UK nationals even where the conduct occurred outside of the UK.

2. Slavery is broadly defined

The key elements in terms of identifying slavery, forced labour and human trafficking are the deprivation of freedom, coercion, and the facilitation of travel with a view to exploitation. This is not always easy. Further information is set out in the Detailed KWM Synopsis.

3. Local laws may also apply

A number of Asian jurisdictions already have laws that require businesses to take steps to mitigate the risk of slavery and human trafficking, although the approach is decidedly mixed. These laws may be specific to the issue or operate as a predicate offence to money laundering.

For example, it is an offence under Hong Kong law to traffic persons to or from Hong Kong for prostitution purposes, carrying a maximum sentence of 10 years’ imprisonment. This is the only offence under Hong Kong law that is specific to slavery or human trafficking. The remainder of the Hong Kong anti-slavery and human trafficking regime comprises a patchwork of offences under legislation, such as in relation to immigration and employment, alongside the general criminal law. These offences can be used to prosecute persons who engage in slavery and human trafficking, although they tend to carry less severe penalties, rarely exceeding 4 years.

Most of these trafficking-related offences are indictable offences for the purposes of the Organized and Serious Crimes Ordinance (Cap 455). This Ordinance criminalises dealing in the proceeds of indictable offences. It also makes it an offence to fail to make a disclosure to the Hong Kong Joint Financial Intelligence Unit where a person knows or suspects that property is the proceeds of an indictable offence. Accordingly, a person who deals in or fails to report the proceeds of slavery or human trafficking may commit an offence in Hong Kong.

4. Staff training is essential

There are significant penalties for non-compliance that can extend to both businesses and individuals. Staff should be trained to detect slavery and human trafficking. Staff should also be informed of the potential for individual criminal liability.

5. You need to know what to look for

Businesses should review their supply chains and suppliers to ensure that slavery and human trafficking is not taking place. Promoting compliance requires:

developing policies and procedures in relation to slavery and human trafficking; performing due diligence investigations into suppliers and supply chains; assessing slavery and human trafficking risks across the business; and complying with the Annual Statement requirements where they apply.

6. There are tools available to assist you

There are a range of tools that can assist businesses with assessing and managing risk, and with compliance generally.

For example, the Global Slavery Index ranks 167 countries according to a wide range of factors that can assist businesses to inform their risk assessments by looking at the rankings of countries in which they operate or which otherwise form part of their supply chain.

Additional information specific to particular typologies, individuals and companies is becoming significantly more accessible through professional third party information providers and specialist bodies.

7. There is more regulation to come

The OECD has indicated a strong focus on human trafficking, including issuing recently Guiding Principles on the subject. Action to combat slavery and human trafficking is also being taken by countries including the United States, Brazil, France and Australia.

We expect a significant body of further regulation in this area.

Source: King & Wood Mallesons

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Eleven former Deutsche Bank, Barclays and Société Générale employees are due to become the first people formally charged with conspiracy to rig Euribor, an international benchmark used to set interest rates on a range of financial products, including mortgages.

In the latest chapter of a global rate-fixing inquiry started by US regulators in 2008, 10 men and one woman are scheduled to appear at Westminster magistrates court in London on Monday to be charged with plotting to manipulate the euro interbank offered rate.

Global investigations have culminated in banks and brokerages paying about $9bn (£6.2bn) in regulatory settlements and more than 30 individuals being charged.

The former middle managers, traders and Euribor rate submitters appearing in court on Monday span six nationalities and are resident in countries ranging from the US to Denmark and Singapore.

Christian Bittar, a French Singapore-based star trader who was once one of Deutsche Bank’s most profitable money markets managers, will be joined in court by former German colleagues Achim Kraemer, Andreas Hauschild, Ardalan Gharagozlou, Jörg Vogt and Kai-Uwe Kappauf.

Also in the dock are four former Barclays employees: Frenchman Philippe Moryoussef, Briton Colin Bermingham, Dane Sisse Bohart and British and Italian dual national Carlo Palombo. The lineup is completed by French former Société Générale trader Stephane Esper.

Lawyers for Bittar and Hauschild said their clients would contest the allegations vigorously. Lawyers for Vogt and Palombo have declined to comment and others did not respond to requests for comment.

Designed to reflect the cost at which banks can borrow from each other in different currencies over varying time frames, rates such as Euribor and the London interbank offered rate (Libor) are benchmarks for about $450tn of financial products.

Monday’s proceedings represent the fourth rate-rigging prosecution launched by the UK’s Serious Fraud Office since it joined the global inquiry belatedly in 2012. US and British prosecutors have each concluded one jury trial to date, with one trial continuing in London and another scheduled to begin in the city next month.

The cases are coming to court more than three years after Barclays became the first bank to reach a global settlement with authorities in 2012, admitting that its traders tried to rig Libor and Euribor from 2005 through 2009. It was fined $450m.

Since then, 10 other major financial institutions have been fined in Europe and the US for their role in the saga, including UBS, Lloyds, JP Morgan, Citigroup and Icap.

Deutsche Bank was fined a record $2.5bn in April. As part of that deal its London-based subsidiary pleaded guilty to criminal wire fraud and the parent group entered a deferred prosecution agreement to suspend criminal charges.

Source: The Guardian

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The tax evasion scandal which immersed HSBC’s Swiss private bank last year will not see any further action taken. It was revealed on Monday that the Financial Conduct Authority (FCA) concluded its examination of the HSBC unit several months ago, and that the bank was informed of its decision at the time.

The conclusion of the FCA’s review was not published at the time, as it was not a formal enforcement investigation. At the peak of the review last February, the FCA stated: “The FCA is working closely with the firm and other agencies which have an interest in this matter to ensure that any questions this may raise in relation to any current practices and culture of HSBC are addressed.”

The investigation was focused on events predominantly between 2005 and 2007. The FCA noted significant improvements made by the bank following these dates. The group changed its senior management team and employed thousands more staff to work in compliance roles.

The news is positive for HSBC, which is due to decide within weeks on the outcome of a nine month review of whether it should relocate its headquarters. According to The Times, the bank has now confirmed that both New York and Hong Kong have been ruled out as options, but Toronto is being considered.

Early speculation suggested that the bank might go back to its historic base in Hong Kong if a move were made. However, with Canada standing as HSBC’s biggest North American market, it is now in the running.

As UK regulations are improved, the bank may still decide to stay at its London base. A decision is expected early this year.ADNFCR-3006-ID-801809458-ADNFCR

Source: Compliancy Services

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