Financial Action Task Force
AML/CFT - FATF publishes follow-up report on UK’s measures and compliance - 9 June 2022
The Financial Action Task Force (FATF) has published a follow-up report (the Report) on the UK’s anti-money laundering (AML) and countering the financing of terrorism (CFT) measures and its level of compliance with FATF Recommendations. The Report follows the FATF’s mutual evaluation report (the MER Report), published in December 2018.
The Report notes that the UK has made progress in addressing most of the technical compliance deficiencies identified in the MER Report. As a result, the FATF has re-rated the UK on Recommendation 13 from ‘Partially Compliant’ to ‘Compliant’. The FATF notes that the UK is Compliant on 24 Recommendations, ‘Largely Compliant’ on 15 Recommendations, and Partially Complaint on 1 Recommendation.
FATF Follow-up Report & Technical Compliance Re-Rating: Anti-money laundering and counter-terrorist financing measures: United Kingdom
Executive summary
European Supervisory Authorities
AML/CFT - ESAs publish joint report on withdrawal of authorisation for serious breaches of rules - 1 June 2022
The European Supervisory Authorities (ESAs) - comprising the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority - have published a joint report (dated 31 May 2022) on the withdrawal of authorisation for serious breaches of anti-money laundering (AML) and countering the financing of terrorism (CFT) rules. The joint report fulfils the ESAs’ mandate under Objective 5 of the Council of the EU’s December 2018 ‘Anti-Money Laundering Action Plan’.
According to the report, only the Capital Requirements Directive (2013/36/EU) sets out an express ground to withdraw authorisation for serious breaches of AML/CFT rules. The ESAs support the introduction in the sectoral acts which are not yet covered of a specific ground empowering competent authorities to withdraw the authorisation (or registration) solely on the ground of serious breaches of AML/CFT rules as a last resort measure and respecting proportionality requirements. The report also calls for the inclusion of assessments by national competent authorities of the adequacy of the arrangements and processes to ensure AML/CFT compliance as a condition for granting authorisation or registration.
Joint ESAs Report: on the withdrawal of authorisation for serious breaches of AML/CFT rules (ESAs 2022 23)
Press release
Ministry of Justice
Post-legislative assessment of the Fraud Act 2006 - Ministry of Justice publishes memorandum - 8 June 2022
The Ministry of Justice (the Ministry) has presented a post-legislative assessment of the Fraud Act 2006 (the Act) to the House of Lords, as per the government’s process for post-legislative scrutiny, following consultation with a wide range of practitioners and stakeholders. A previous assessment was conducted in 2012 and concluded that the Act was working well. This new memorandum assesses whether the Act remains an effective tool for tackling fraud in an environment of rapidly developing technology.
Based on responses it has received, the Ministry believes that the Act continues to meet its objectives, though there was a difference of opinion as to whether the Act sufficiently combats complex digital fraud. Other concerns referred to the variation in fraud sentencing. The memorandum also considers whether the common law offence of conspiracy to defraud remains necessary, or whether the relevant behaviour could be charged adequately under the Act or through a series of statutory conspiracy offences.
Post-Legislative Assessment of the Fraud Act 2006
Webpage
HM Treasury
Breaches of financial sanctions - OFSI publishes updated Guidance on enforcement and monetary penalties - 8 June 2022
The Office of Financial Sanctions Implementation (OFSI), which is part of HM Treasury, has published updated Guidance on enforcement and monetary penalties for breaches of financial sanctions. OFSI has the power to impose monetary penalties for breaches of financial sanctions under the Policing and Crime Act 2017 (the 2017 Act), as amended by the Sanctions and Anti-Money Laundering Act 2018 (SAMLA). Following the Russian invasion of Ukraine, the government brought forward the Economic Crime (Transparency and Enforcement) Act 2022 which included important changes to OFSI’s powers. The measures will commence on 15 June 2022, and the updated guidance reflects these changes.
For breaches of financial sanctions that are committed after 15 June 2022, OFSI will be able to impose civil monetary penalties on a strict civil liability basis. This means the previous requirement to prove that a person had knowledge or reasonable cause to suspect that they were in breach of financial sanctions will be removed, though OFSI will still bear the burden of proof to establish that there was a breach of financial sanctions prohibitions. There is no equivalent change to the financial sanctions criminal legal test or threshold.
OFSI has also gained the power to publicise details of financial sanctions breaches committed after 15 June 2022 where a monetary penalty has not been imposed. These will include a summary of the case and the persons that committed the breach. The power only applies where there is found to be a breach of financial sanctions, and publication will be considered on a case-by-case basis. The changes also introduced flexibility in the review process for monetary penalties.
The Guidance will apply from 15 June 2022.
OFSI Guidance: OFSI enforcement and monetary penalties for breaches of financial sanctions
Updated webpage
Recent cases
Tecnimont Arabia Limited v National Westminster Bank plc EWHC 1172 (Comm) - 17 May 2022
Whether a bank that had received monies from an innocent third party is liable in restitution for the dissipation of monies as a result of its own customer’s fraud
The High Court has considered whether a bank is liable to victims of fraud who were not direct customers. Tecnimont Arabia Limited (TAL), part of a multi-national Italian corporation operating in Saudi Arabia, was the victim of an authorised push payment (APP) fraud. Through business email compromise - a form of phishing attack - TAL was tricked into making a USD 5 million payment to a dollar account held at National Westminster Bank plc (the Bank), in the name of a third party, Asecna Limited. TAL sought to hold the Bank responsible for failing to freeze the account until nearly all the funds had been dissipated.
TAL’s main argument was that the Bank had been unjustly enriched as the recipient of the payment. HHJ Bird (sitting as a judge of the High Court) found that the Bank had not been unjustly enriched at the expense of TAL, noting that the payment had passed through the various layers of the international banking system, so the claim failed.
The judge also considered whether the Bank had a defence of change of position in good faith, because it had paid out the money on its customer’s instructions. The fundamental question was whether it would be unjust to deny restitution to TAL. TAL argued that the Bank had opportunities to freeze the funds, but the judge did not accept that any of them would have made it unjust to deny TAL’s claim.
Tecnimont Arabia Limited v National Westminster Bank plc EWHC 1172 (Comm)
