Banking & Finance Further News and Updates

Published 29 June 2018

 DAC Beachcroft's Banking & Finance Disputes Update focuses on events occurring within the banking, financial, city business and general regulatory sectors that give rise to or concern contentious matters, civil or regulatory here are some further news and updates.

Lisa Osofsky appointed as new director of SFO

Mark Thompson (COO of the SFO) is filling the role on an interim basis before Ms Osofsky starts on 3 September 2018. Ms Osofsky has previously worked for the FBI as Deputy General Counsel and Ethics Officer and Goldman Sachs as Money Laundering Reporting Officer and Executive Director. She currently works as a Managing Director for Exiger, a global compliance consultancy firm. Her background may well shape the SFO's approach to its role and relations with US authorities. She has previously supported the SFO being subsumed by the NCA, although now opposes it.

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UK's Sanctions and Anti-Money Laundering Act 2018 becomes law

It aims to allow the UK to implement its own sanctions regime after Brexit, but it goes well beyond the current EU regime. Sanctions may be imposed for "discretionary purposes" of the Government or "gross human rights violations". Financial institutions will be subject to a higher reporting standard, and British Overseas Territories will be required to publish public registers of beneficial owners by the end of 2020.

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The burden of anti-corruption legislation on small businesses

A cross-party select committee led by Lord Saville (a senior judge) will analyse the effectiveness of the Bribery Act 2010 following concerns it is too burdensome on small businesses. Currently, companies that do not have appropriate systems in place to prevent bribery can be prosecuted under the Bribery Act with unlimited fines. The Committee aims to publish a call for evidence in June 2018 and will welcome submissions from anyone with experience of the Bribery Act.

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MPs call for investigations of Lloyds bank and KPMG over HBOS fraud

The All Party Parliamentary Group on Fair Business Banking has published a report calling for a probe following the leak of an internal Lloyds Bank report claiming the lender knew of and failed to disclose fraud at HBOS and alleging misconduct by KPMG at the height of the 2008 financial Crisis.

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SFO brings additional charges against two individuals in Unaoil investigation

The SFO's investigation relates to suspected offences of bribery, money laundering and corruption. Mr Akle and Mr Al Jarah have been charged with conspiracy to make corrupt payments to secure a contract worth US$733m in Iraq. Both men currently reside in the UK.

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Four men imprisoned after attempt to smuggle proceeds of crime in animal feed

Border Force officers stopped a van at the Channel Tunnel and discovered £980,000 in cash hidden in sacks of animal feed. A second van was stopped 8 days later with £500,000 in cash packed the same. The NCA identified the point at which the vans collected the money, and all men were found guilty and sentenced between two and seven years imprisonment.

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The EBA to tighten outsourcing rules for banks ahead of Brexit

The EBA has told banks not to outsource their essential operations (e.g. IT) to third parties, and if they outsource too much they risk becoming an "empty shell" and lose their authorisation to carry out financial activities. This is particularly relevant for banks in London that are opening hubs in the EU to maintain links after Brexit and would like to use their UK base for some services.

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City warns of post-Brexit contract validity problem – millions of people at risk

Banks and Insurers don't have long to rewrite outstanding cross-border financial contracts worth trillions of pounds which could become legally void after Brexit and pose "a significant risk to financial stability" TheCityUK has said.

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32Red pays fine of £2m after anti-money laundering failings

32Red failed to meet its obligations on social responsibility and addressing the risk of money laundering. In particular, it failed to identify that one of its "VIP" customers may have had a gambling problem and to pick up on signs of potential money laundering after they deposited £758,000 with 32 Red between 2014 and 2017. The penalty was applied as part of a regulatory settlement with the Gambling Commission.

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