29/11/2024 - Validient's Weekly Roundup

This week in anti-money laundering (AML) news, Barclays fined ￡40 million for disclosure failings by the Financial Conduct Authority (FCA) and the FCA themselves, accused of incompetence following a damning report. Germany's BaFin withdrew its AML monitor from Deutsche Bank, signalling progress in their compliance improvements. Meanwhile, the FCA digital passports have been proposed to reduce bank compliance costs, and the spotlight has intensified on cryptocurrency's role in laundering illicit funds.

Barclays fined ￡40 million by FCA

The Financial Conduct Authority has fined Barclays ￡40 million for failing to disclose ￡322 million in advisory fees paid to Qatar Holdings during its 2008 capital raising. This non-disclosure was deemed "reckless and lacked integrity," misleading investors about the true costs of Barclays' fundraising efforts to avoid a government bailout during the financial crisis. Initially, the FCA imposed a ￡50 million fine in 2022, but Barclays contested it. The bank has now withdrawn its appeal to move past these longstanding issues, resulting in the reduced penalty.

FCA suggests digital passports could reduce bank compliance costs

Emily Shepperd, Chief Operating Officer of the FCA, proposed the adoption of digital passports to streamline compliance processes for financial institutions. Speaking about the FCA's new five-year strategy, Shepperd highlighted that digital passports could simplify regulatory requirements, thereby reducing the compliance burden on banks and enhancing operational efficiency.

BaFin removes special monitor on Deutsche Bank

German regulator, BaFin , has removed the special monitor overseeing Deutsche Bank's AML controls. Appointed in 2018 due to deficiencies in the bank's AML processes, the monitor's mandate was extended in February 2024, with BaFin threatening fines if improvements weren't made. Despite Deutsche Bank's efforts to address these issues, BaFin has now withdrawn the monitor. However, a separate monitor appointed in October 2023 to oversee consumer service problems at the bank's Postbank unit remains active.

MPs brand UK financial regulator 'incompetent'

A parliamentary report has criticised the FCA, labelling it "incompetent at best, dishonest at worst." The report, based on nearly three years of investigation and testimonies from fraud victims, whistleblowers, and current and former FCA employees, highlights a defective culture within the regulator, including dishonesty, bullying, and neglect towards whistleblowers.

Drug cartels use cryptocurrency Tether to launder money, court documents reveal

Mexican and Colombian drug cartels are increasingly using the cryptocurrency Tether (USDT) to launder millions of dollars. U.S. federal authorities have identified Tether's growing role in facilitating illicit financial activities, including money laundering for drug trafficking operations.

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