This Month in Compliance: August 2022

Posted on August 31, 2022
Written by Natalie Davies

Each month, we take a look at the latest compliance news and insights to keep you on top of what you need to know from across the industry.

Despite being a month when many of us take to more relaxing pursuits, the world of compliance and financial crime has not been quite as tranquil. 

The month of August has seen a London-listed fintech slapped with a crippling fine for failings in its AML controls, while real estate firms got to grips with a new overseas entity register and a group of MPs called for the loosening of ‘restrictive regulatory practices’ to level the playing field for challenger banks. 

Hefty Fines for FinTech’s Failures in Anti-Money Laundering Controls

The Financial Services Regulatory Authority (FRSA) of Abu Dhabi Global Market (ADGM) has fined the London-listed fintech Wise, a staggering $360,000 (£307,801). 

In a statement issued on Tuesday 30th August, the ADGM shared that: “Wise did not establish and maintain adequate AML systems and controls to ensure full compliance with its AML obligations.”

In its rep sheet, the regulator outlined how the company had:

  • Failed to identify and verify the source of funds and wealth of those customers it had identified as high-risk
  • Neglected to obtain approval of senior management to establish business relationships with high-risk customer
  • Not considered customer nationality as part of its risk assessments of customers
  • Not gathered or considered adequate information on the intended nature of business for some customers before establishing a relationship with them

Newly Launched Register has Implications for Real Estate 

On 1 August 2022, a new Register of Overseas Entities, held by Companies House, came into force through the Economic Crime (Transparency and Enforcement) Act 2022. 

Under this legislation, any overseas entities who want to buy, sell, or transfer property in the UK now need to be registered and declared to Companies House. 

Since 2016, UK companies owning property have had to declare their owners and ensure this information is publicly available in the People with Significant Control (PSC) register. 

However, many foreign countries do not have an equivalent, public register of ownership, and it is not always possible (or easy) to find out who controls a company in another country. 

This is the need that the recently launched Register of Overseas Entities is trying to satisfy.

Our recent article takes a look at the Register, and the impact it will have on property transactions in more detail. 

Calls for a ‘Big Bang’ to Address ‘Deep Structural Malaise’ in Banking

A report issued towards the end of August, prefaced by the Rt Hon Karen Bradley, addressed the role that challenger banks and building societies could play in the Government’s ‘levelling-up’ agenda. 

In the report, a group of MPs known as the All-Party Parliamentary Group (APPG) issued a stark warning for the future of banking services in the UK if current levels of regulation are maintained, and shared how challenger banks, building societies and other fintechs could come together to help level up the UK. 

“The UK’s one-size-fits-all regulatory model for banks – challengers, building societies  and institutions big and small isn’t working.  This is not being caused by the day-to-day realities of the UK economy or recent events such as COVID but a deeper structural malaise.”

Rt Hon Karen Bradley, All-Party Parliamentary Group (APPG)

With five clear recommendations presented in the report, the APPG is advocating for a ‘Big Bang’ to redefine restrictive regulatory practices which “enshrine the dominance and market share of the big five banks”, and facilitate growth and competition within the sector through reform, while supporting challenger banks in their development – and ability to compete. 

To read the ‘Levelling-Up’ report from the APPG in full, visit their website.

Launch of NorthRow’s Inaugural State of Compliance Survey

Earlier this month, we announced the launch of the NorthRow State of Compliance Trends survey. 

In this, first of what will be an annual survey, we are looking for senior compliance professionals to share their take on the challenges facing the function, their priorities for the year ahead and their views on the profession as a whole, as well as their predictions for the future of compliance. 

Responses will be used to create a report which analyses the approach used by sectors and organisations within the market to manage, monitor and report on compliance risks. 

For every response, we’ll be donating £2 to Scotty’s Little Soldiers, a charity for bereaved British Forces children. 

Simply click here to complete the short survey and add your views to this comprehensive study of the compliance landscape. 

Thank you in advance for your participation.