DFSA Latest Developments


  • DFSA Fine ABN AMRO for AML Failings
  • DFSA Release CP No. 103 (Insurance Regime)
  • DIFC Review Data Protection Laws
  • DFSA Bawabaty Initiative
DFSA Fine ABN AMRO for AML Failings

The Dubai Financial Services Authority (DFSA) have found the Dubai International Financial Centre (DIFC) branch of ABN AMRO (ABN) to be in breach of their laws and rules having failed to establish sufficient anti-money laundering (AML) safeguards between the period of 1st January 2013 to 31st December 2014. As a result, ABN has been issued a fine of USD 640,000 and been tasked with taking further remedial action in their AML efforts. ABN’s initiative to carry out investigations upon receipt of internal complaints was a mitigating factor in the DFSA’s response and this, coupled with ABN’s agreement to reach an early settlement, significantly reduced the size of their fine.

The DFSA’s findings can be split into the following areas

Customer Risk Assessment and Due Diligence

ABN failed to:

  • Identify the beneficial owner or source of wealth for many customers
  • Adequately identify the nature of business of clients
  • Identify the risks relating to operating country of a client
  • Justify complex legal structures of clients
  • Adequately assign risk ratings to clients or differentiate the severity of risk factors

Third Party Transactions (TPT)

ABN failed to:

  • Identify TPT taking place in clients’ accounts
  • Identify the risks TPT pose when a client’s intention to do so was exposed in risk assessments

Transaction Monitoring

  • Flimsy and even false explanations provided by ABN relationship managers were often accepted to disregard transactional alerts
  • ABN accepted suspicious and unverified supporting documents to dismiss transactional alerts
  • Transactional alerts were found to be left open and unaccounted for by ABN for an unacceptably long period of time

ABN’s Compliance Department and Senior Management:

  • Did not challenge inadequate information or documentation
  • Failed to respond to escalated transactional alerts or accepted unfounded reasoning for discounting them
  • Did not ensure that staff were trained on policies, procedures, systems and controls related to money laundering
  • Did not ensure that the policies, procedures, systems and controls they had in place operated effectively in practice
  • Did not establish adequate systems and controls to monitor the activities of all of its employees

The DFSA could not find evidence that money laundering took place but ABN’s actions highlighted a high risk of financial crime within their business and the DIFC.

DFSA Release CP No. 103 (Insurance Regime)

The DFSA has released Consultation Paper (CP) No. 103 which contains proposals relating to the Insurance Regime. The proposals aim to:

  • specify what activities can be undertaken by different types of insurance intermediaries;
  • make clearer where regulation is not required through clear exclusions;
  • refine the conduct of business requirements applicable to Insurers, Insurance Intermediaries and
  • Insurance Managers to make our regime more risk-based;
  • remain compliant with the Insurance Core Principles (ICP)

The deadline for providing comments on this CP is 11th February 2016.

DIFC Review Data Protection Laws

The Dubai International Financial Centre (DIFC) Commissioner of Data Protection is reviewing the existing DIFC Data Protection Law in light of the recent European Court of Justice decision which no longer finds the US Department of Commerce’s Safe Harbour Policy reliable.

Previously, European entities (and in turn DIFC entities, as the DIFC Data Protection Law adopts the same approach as the EU for assessing the data protection compliance of jurisdictions) could transfer personal data to US entities that were Safe Harbour Policy compliant and know that this condition was enough to satisfy EU data protection compliance demands.

Without this assurance (and while EU-US negotiations continue), DIFC entities will need to go back to the DIFC Data Protection Law and ensure they are taking other necessary measures to remain compliant when transferring personal data to US entities.

DFSA Bawabaty Initiative

As part of the DFSA’s Bawabaty Initiative, the regulatory body has selected 10 UAE nationals (who had the highest scores in an assessment taken at an October workshop on Islamic banking) to assist in gaining a Chartered Institute for Securities and Investment qualification for Fundamentals of Islamic Banking and Finance. Non-sponsored individuals will receive a 50% discount on examination fees as the DFSA continues to support those in the local community wishing to pursue a career in financial services.

Further information
If you would like to discuss these latest developments in more detail, please contact:
Clare Curtis (CCurtis@cclcompliance.com)

Middle East Regulatory Updates


  • Amendments to Bahrain Bourse Listing Requirements
  • Revisions to Qatar Financial Centre Law
  • A Step Forward for Lebanon’s Financial Market
  • The Central Bank of Bahrain to set up a Centralised Sharia Board
  • OFAC Designates UAE Company
  • Oman Trading via DME
  • Kuwait CMA New Rules for Sukuk Issuances
  • International Workshop on Preventing Terrorist Financing
  • AML Obligations in the UAE: The Recent Changes
Amendments to Bahrain Bourse Listing Requirements

Following the issue of Resolution No. 5, the Bahrain Bourse listing requirements have now been amended to fall in line with recommendations from the Central Bank of Bahrain. The new requirements are applicable to all future companies intending to list their shares and must also be adhered to by existing listed shareholding companies within 6 months. The tighter controls – which include depositing issued shares in the Bourse Clearing, Settlement, Central Depository and Registry system and sets a minimum tradeable stock limit – are a move towards the unified listing requirements in the GCC and encourages integration with the global market, offering investors greater opportunities with Bahraini shareholding companies.

Revisions to Qatar Financial Centre Law

The Qatar Financial Centre (QFC) is expected to pass new legislation in 2016 that will work towards introducing more foreign investors to the local market by simplifying current procedures. The law revisions will grant international investors greater onshore access – including listing with the Qatar Stock Exchange – and use of the QFC courts.

The QFC CEO Yousuf Mohamed al-Jaida has stated that the centre is also working on a regulatory reform to combine the framework between the QFC, the Qatar Financial Market Authority and Qatar Central Bank to regulate asset management, banking and insurance.

Elsewhere in Qatar, the Ministry of Economy and Commerce held two information sessions on the new Commercial Companies Law with public shareholding and public joint stock companies. The new provisions were met with praise for their streamlined incorporation procedures, which forgo the need for certain court approvals as well as applying international standards in determining the ranking of countries. The speakers also advised companies of their new legal obligations such as a requirement for public joint stock companies to list on the stock exchange within one year or switch to a private joint-stock company and to launch an initial public offering within 60 days from the date of incorporation. The new nominal share price has also been changed from a fixed QR 10 to between QR1 and QR100.

A Step Forward for Lebanon’s Financial Market

Lebanon’s parliament has proved its commitment to combating money laundering and terrorist financing following the passing of new financial laws and amending existing legislation this month, which keeps them in line with requirements of the Financial Action Task Force. This means they will avoid causing problems for international financial institutions who continue to do business with them. Amendments include:

increasing the number of identified financial crimes from seven to twenty-one: Insider trading, fraudulent bankruptcy crimes and abuse of trust are now recognised crimes, amongst others.
clarity on definitions and procedures
broader list of entities obliged to report to the Special Investigation Commission on financial crimes such as lawyers, public notaries and public accountants.
2.4 The Central Bank of Bahrain to set up a Centralised Sharia Board

The Central Bank of Bahrain (CBB) has declared its plans to establish a centralised sharia board by the end of this year to regulate all Islamic financial institutions in the country. The system is much akin to that implemented in Oman and differs to the CBB’s current sharia board whose jurisdiction is restricted to overseeing their own products only.

The CBB hope the new centralised approach will limit variations between products offered by the Islamic financial institutions, quicken the development of new products, and reassure investors. They also anticipate that the move will encourage other jurisdictions in the GCC to follow their lead; the UAE have previously stated their intention to create a similar regulatory function for Islamic financial institutions.

OFAC Designates UAE Company

The collaborative effort of the Central Bank of the UAE, the Anti-Money Laundering Unit at Dubai Police General Headquarters and the US Drug Enforcement Administration has aided the action of the US Office of Foreign Assets Control (OFAC) in targeting Dubai-based money services business Al Zarooni Exchange under Executive Order (EO) 13581. Al Zarooni Exchange has been found to have played a role in the business conducted by Altaf Khanani Money Laundering Organisation (Khanani MLO) who launder illicit funds for organised crime groups, drug trafficking organisations, and designated terrorist groups throughout the world. Khanani MLO have also been pursued by OFAC under EO 13581 and the resultant effect hinders them from gaining access to the international financial system to launder money for their illicit clientele, who include al-Qaida, Hezbollah and the Taliban.

Oman Trading via DME

Oman Ministry of Oil and Gas (OMOG) have added Dubai Mercantile Exchange (DME) Auctions as an optional tool to buy and sell spot exports of Oman Blend Crude Oil.

The DME Auctions platform offers the commodities trading market the ability to transparently trade physical energy products via an immediate auction system for the first time in the Middle East. The platform was launched in September and OMOG is now their first customer. It demonstrated Oman’s agenda towards transparency in the marketing and pricing of its crude oil exports.

Kuwait CMA New Rules for Sukuk Issuances

The Kuwait Capital Markets Authority (CMA) has developed a new sukuk framework which outlines:

  • the terms and structure of sukuk
  • requirements for appointing trustees
  • how to set up special purpose vehicles
  • sukuk governance
  • public issuance requirements - CMA and Central Bank of Kuwait approval; credit rating

The CMA anticipates promising sukuk issuance potential. A recent decline in oil prices suggests the GCC may consider issuing sovereign debt which in turn will provide a benchmark to help corporate issuance, not to mention a large client base of companies with a sharia-compliant necessity.

International Workshop on Preventing Terrorist Financing

The Ministry of Foreign Affairs and the Central Bank of Bahrain held a workshop this month on counter-terrorist financing (CTF) with an emphasis on the potential exploitation of charitable organisations. The representatives from 9 countries agreed:

  • the need to encourage non-profit organisations (NPO) to be a part of the official financial sector, enabling more effective monitoring practices
  • on the importance of open communication channels to share best practice methods, raise awareness among employees of misuse potential and implement preventative measures
  • the need for financial regulatory authorities to be able to execute their judiciary powers over NPOs who violate rules
  • on a transparency requirement in the industry; for NPOs to make publicly available audited and annual financial statements which show an attempt to identify beneficial owners

They also reaffirmed their commitment to the CTF strengthening measures discussed at the 2104 Manama Meeting on Combating the Financing of Terrorism.

AML Obligations in the UAE: The Recent Changes

On 15th & 16th November 2015 at The Palace Downtown Dubai, Academy & Finance organised a conference titled ‘Anti money laundering obligations in the UAE: the recent changes’.

With the enactment of Federal Laws no 7 of 2014 and no 9 of 2014 & the Council of Ministers’ Decree no 38 of 2014, the UAE has brought its AML & CTF legal framework in line with the most demanding international standards set by the FATF 2012 recommendations. As a result, the UAE is expanding the definition of money laundering, mobilising and empowering the regulatory authorities, clarifying the administrative and penal sanctions and extending the customer due diligence duties relative to the identification of beneficial owners and PEPs.

Throughout the conference, the speakers and presenters demonstrated the practical implications of these laws and the need to comply with the due diligence and record keeping requirements. The conference focused on the critical and delicate aspects of Suspicious Transaction Report and freezing of bank accounts. The conference also offered the authorities and regulators the opportunity to communicate these crucial changes and to answer the questions of the UAE professionals onshore and in free zones.

The seminar demonstrated that the UAE is moving ahead by reinforcing its AML/CTF laws as a competitive global financial centre.

Further information
If you would like to discuss these updates in more detail, please contact:
Christopher Hobbs (CHobbs@cclcompliance.com)

International Developments


  • Swiss Implement AML Rules
  • Anti-Money Laundering Failings by East West Bank
  • Nigeria Commits to Combating Money Laundering
  • Trinidad and Tobago’s Compliancy Ratings Under Threat
  • The De-Banking of Australian and UK Banks
  • Transparency International Condemns UK and Canada in Reports
  • Santander AML Investigation
  • Central Bank of Ireland Report on Irish Funds Sector
  • Changes to New Zealand’s Financial Markets Conduct Regulations
  • UK FCA and PRA Report
Swiss Implement AML Rules

Accusations made earlier this year towards the Swiss branch of HSBC by the Central Bank of Argentina have further cemented the country’s reputation as a haven for wealthy individuals trying to hide their assets. Challenging this view, the Swiss government has implemented the new Anti-Money Laundering Act – incorporating the recommendations from the Financial Action Task Force – which will come into force in January 2016.

The legislation introduces further due diligence requirements for traders accepting cash payments over CHF 100,000 and also places requirements on ecclesiastical foundations to be registered in the commercial register.

Anti-Money Laundering Failings by East West Bank

The US Federal Reserve (the Fed) has found deficiencies in the anti-money laundering practices of the Pasadena branch of East West Bank. Although no penalties were issued, East West Bank agreed to enforcement action which includes the need to establish a compliance committee and conduct an assessment of the bank’s staff within 60 days. The bank will also introduce a monitoring system to report suspicious transactions promptly and implement policies to better collect customer information – including those oversees – and change how they classify the risk level of their customers
Following talks with the International Monetary Fund, the Senate House in Pakistan has finally approved amendments to the Anti-Money Laundering Act (2010) which, amongst other changes, incorporates tax evasion and offences. The new law comes in line with Financial Action Task Force standards and will allow the Pakistani government to better detect, investigate and prosecute the perpetrators of money laundering crime and should lead to improved relations with other countries and institutions.

Nigeria Commits to Combating Money Laundering

Nigeria has affirmed its commitment to combating money laundering and terrorist financing following a statement from the newly appointed Chairman of the Committee on Financial Crimes in the Nigeria House of Representative. Kayode Oladele has made assurances that adequate funds will be allocated in the 2016 budget to allow the Economic and Financial Crimes Commission to carry out their governing functions and preventing corruption.

Nigeria has also re-applied for membership to the Financial Action Task Force and complied with all requirements – South Africa is currently the only African member.

Trinidad and Tobago’s Compliancy Ratings Under Threat

Preliminary evaluations by The Financial Action Task Force (FATF) have given rise to concern from the US and Canada who feel that Trinidad and Tobago’s (T&T) compliance ratings should be downgraded due to their poor regional Financial Intelligence Unit (FIU) and deficiencies in respect to T&Ts ability to identify beneficial ownership of legal persons or regulate their non-profit organisation sector.

Any level of sanction could have a significantly negative impact on the business of financial institutions in the country. The international investment market will be less inclined to associate with a country with weak compliance ratings for fear of a decline in share prices or having their own reputation and standing in the industry tainted.

T&T Attorney General (AG) Al Rawi has stated that a remedial assessment of changes to legislation is under way to tackle any perceived FATF failures which include counter terrorist financing measures of freezing and confiscating assets and increased regulatory powers for the FIU. AG Al Rawi also pointed out that despite the country’s misgivings, T&T’s commitment to compliance had been recognised by FATF in a statement by the organisation which acknowledged a development in the country’s anti-money laundering and counter terrorist financing regime.

The De-Banking of Australian and UK Banks

The Australian Transaction Reports and Analysis Centre have seen 719 accounts with remittance firms closed between January 2014 and April 2015 by some of the country’s major banks. The banks have said this is due to growing compliance risks and the decisions are clearly an effort to avoid the fines and reputational damage that will follow if evidence of money laundering or terrorist financing are found.

As well as the increased costs incurred by remittance firms for carrying out transactions without access to the global banking system (in contravention to the G20 policy to reduce the costs of remittances to 5% of the value of each transaction), another consequence of this ‘de-banking’ is an increased portion of funds are entering the black market as remittance firms have had to resort to extreme measures to continue to conduct their business. The Australian Remittance and Currency Providers Association have seen a substantial money laundering risk in these ‘extreme measures’ as it includes instances of large sums of physical cash being transported across borders.

Similarly, many banks in the UK are choosing to close their accounts with small money services businesses following tighter anti-money laundering (AML) rules because of their perceived high risk for terrorist financing and money laundering. The Executive Chairman of the Association of UK Payments Institutions has said there is a new Payment Services Directive which prohibits banks from ‘dumping’ accounts in this way but it won’t come into force for a couple of years.

The US Office for Terrorist Financing and Financial Crimes are also working to address the issue of ‘de-banking’ – in collaboration with the World Bank, the Financial Stability Board, the Financial Action Task Force and the G-20 – and advise financial institutions to manage potential risks rather than indiscriminately avoiding them.

Transparency International Condemns UK and Canada in Reports

Transparency International’s (TI) review of the UK has assessed that only 1 of the 22 supervisory bodies who are charged with managing the various industries in which cases of money laundering occur (i.e. financial services, law, accountancy, property) is operating at a level above low/unreported, making it a coveted location for disposing laundered funds. The UK government’s own risk assessment has highlighted major areas of vulnerability and TI are moving for the collective supervisory bodies (15 of whom have non-existent measures in place to manage their conflicts of interest) to be scrapped in favour of a single, all-encompassing, high-level functioning supervisor. It was also noted that the UKs approach of having supervisory functions being carried out by a range of private sector bodies was unusual.

Similarly, Canada’s reputation has also been pulled into disrepute by TI who have reported that the country’s weak anti-money laundering framework – which fails to implement the G-20 principles incorporated by the other leaders in 2014 – and lax foreign ownership regulations have enabled illicit individuals from overseas to buy homes and hide their dirty money. TI have detailed Canada’s requirement to establish measures to gather further client information, reveal the beneficial owner of a product or service and to identify politically exposed persons.

Santander AML Investigation

Santander is proceeding with an internal investigation into suspected anti-money laundering violations in relation to the handling of their account with Lycamobile. Suspicious practices (large and frequent cash deposits) and a complex, corporate, tax-evasive banking network have given cause for serious concern. Additionally, Lycamobile has donated more than GBP 1.5 million to the Conservative government since David Cameron has been in power – an arrangement that has been met with much disapproval.

Central Bank of Ireland Report on Irish Funds Sector

The report outlines numerous insufficiencies in Funds firms and Funds service providers with regards to anti-money laundering (AML) and counter terrorist financing (CTF).

The report found a need for:

  • Adequate risk assessments to be carried out in a more timely manner
  • A greater monitoring of service providers carrying out AML/TF functions on behalf of firms
  • Ensuring conditions are fully met by third parties who firms rely on to conduct elements of customer due diligence
  • Greater on-going monitoring controls for investor transactions;
  • More stringent onboarding processes for Politically Exposed Persons to sufficiently identify source of wealth

Some members of the firms’ boards and/or staff to receive outstanding training and awareness with regards to AML/TF issues

Changes to New Zealand’s Financial Markets Conduct Regulations

The following changes to New Zealand’s (NZ) Financial Markets Conduct Regulations have come into force this month which will look to resolve previously identified implementation issues such as:

  • Simplified product disclosure statements for certain offers of debt or equity securities
  • Providing for an offer of financial products that will or may convert into other financial products
  • Clarifying references to retail investors
  • Provision for ongoing confirmation information to be provided to investors relating to derivatives
UK FCA and PRA Report

The UK Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have published their report on HBOSs 2008 failings. The impact of their failings has already been well documented but the report did make a number of recommendations as follows:

  • In line with the implementation of the new Senior Managers and Certification Regime, the report emphasises the collective responsibility of each member of a bank’s board of directors to ensure that their business model is upholding the principle of ‘safety and soundness’
  • A recommendation that the banks’ boards should include non-executives from both inside and outside the banking sector
  • Importance for senior management to promote a compliant and ethical culture

Further information
If you would like to discuss this update in more detail, please contact:
Nigel Pasea (NPasea@cclcompliance.com)

Financial Crime Update


  • Global Action following the Paris Attacks
Global Action following the Paris Attacks

In the wake of the attacks in Paris last month, the G-20 leaders have pledged their intention to combat terrorism and emphasised the need to adopt a collaborative approach of information sharing and the freezing of assets in order to target terrorist groups at their source by detecting and cutting off their funding. This view was echoed by the Australian Justice Minister at the Asia-Pacific Counter-Terrorism Financing (CTF) Summit which also took place in the aftermath of the Paris attacks and by the French Foreign Minister Laurent Fabius at a subsequent Parliamentary debate in the city.

The 20 countries at the Asia-Pacific CTF Summit drafted the Sydney Communiqué declaration which proposes establishing the first regional financing risk assessment which will help to identify and target terrorist hubs and highlight areas where safeguards can be reinforced. In addition to deciding to make the CTF Summit an annual occurrence, the members agreed to produce a regional financial framework whereby the faster sharing of information and analysing of terrorist financing will maximise intelligence value.

The G-20 has urged for swifter implementation of the Financial Action Task Force (FATF) recommendations so as to cease the transfer of money to extremist sects like the Islamic State (IS) and some members have proposed the necessity to infiltrate the black market oil trade which has been linked to extremist funding. A FATF report to the G-20 leaders explained that the effectiveness of UN financial sanctions was being diminished as many countries were implementing them too slowly or were not making practical use of them. The report also outlined the anti-money laundering measures FAFT will be taking which include:

  • Encouraging individual jurisdictions to take action and fill any gaps in their legal frameworks so that there are no safe havens for terrorist financing.
  • Updating the FATF Recommendations to require action against the financing of foreign terrorist fighters
  • Preparing guidance to help criminalise terrorist financing and to freeze terrorist assets.
    Working with the Egmont Group of Financial Intelligence Units to educate on emerging terrorist financing threats

The report also commended India who, it notes, has frozen EUR 300,000 worth of assets for 37 entities on suspicion of terrorist financing and money laundering.

In the EU, the European Commission (EC) has expressed their intent to pay particular intention to virtual currencies when reviewing combatting sources of terrorist financing, an opinion reiterated by G-7 finance ministers and Brazil House of Representatives last month. New funding methods are more accessible and there is a real need to monitor activity in the rapidly growing digital currency market which is an avenue not currently regulated in the UK and one that has only had its first enforcement action in US take place in May. The European Union has urged the EC to review other anonymous, non-banking payment methods like pre-paid cards, remittance, cash carriers, and gold/precious metal transfers too.

Meanwhile, Putin has established a new interdepartmental commission to combat terrorist financing which is to be given access to information the prosecutor general's office, the central bank and regional authorities have on terrorist activities.

Finally, the US Senate unanimously passed a bill which imposes sanctions on international financial institutions that knowingly engage in business with Hezbollah. This will now go to the House of Representatives for consideration and is a direct blow to the terrorist group’s funding. Also, the US House of Foreign Affairs held a subcommittee hearing last month on terrorist financing. The panel called out Qatar, Kuwait and Saudi Arabia as noteworthy countries that have failed in their Jeddah Communiqué declaration pledge to tackle terrorist financing, namely by failing to punish known IS financiers in their jurisdictions or omitting to act/not acting severely enough towards US and UN sanctioned individuals. Turkey was also criticised for their under-regulated border controls which aided Iraqi Mujahideen.

Further information
If you would like a more detailed discussion on this update, please contact:
Clare Curtis (CCurtis@cclcompliance.com)

Enforcement Action


  • GFSC Rule on Former Directors
  • Enforceable Undertaking Imposed on Paypal Australia Pty Ltd
  • Canadian Exchange Bureau Penalised
  • Illegal Conduct of Dubai Bank Kenya Officials Under Investigation
  • UK FCA Fines Barclays Bank
GFSC Rule on Former Directors

The Guernsey Financial Services Commission (GFSC) has issued fines of GBP 50,000 to 4 former directors at Confiance Limited as well as 5-year bans for 3 of the directors which prohibit them from performing any director, controller, partner or MLRO functions for a GFSC regulated business or entity. Investigations found there to be significant failings in the company’s anti-money laundering and counter-terrorism financing systems and controls. PraxisIFM has stated their intent to acquire Confiance Limited and work with the regulatory bodies to remedy any outstanding areas of concern.

Enforceable Undertaking Imposed on Paypal Australia Pty Ltd

Paypal Australia Pty Ltd (Paypal Australia) have entered into an enforceable undertaking as imposed by the Australian Transactional Reports and Analysis Centre (AUSTRAC) who found that the organisation’s systems had flaws which posed a significant money laundering and terrorist financing risk. As part of the enforceable undertaking, PayPal Australia has agreed to:

strengthen its existing systems and controls to comply with risk assessment requirements
submit to AUSTRAC an independent expert report detailing PayPal Australia's compliance with Anti-Money Laundering and Counter-Terrorist Financing laws and a plan to remedy identified deficiencies

Canadian Exchange Bureau Penalised

The Canadian Financial Transactions and Reports Analysis Centre (FINTRAC) has fined Services Financiers C.M. Inc USD 17,535 for the breaching of their money laundering laws. FINTRAC reported that the Montreal organisation:

  • had incomplete written policies and procedures for compliance matters
  • failed to assess and document risks related to money laundering and terrorist financing
  • had an inadequate compliance training programme and
  • incomplete record keeping in respect of foreign exchange transaction tickets

FINTRAC explained that their compliance expectations are a means to provide invaluable intelligence for law enforcement and national security partners.

Illegal Conduct of Dubai Bank Kenya Officials Under Investigation

Warrants of arrest have been issued for 4 Dubai Bank Kenya officials on charges of theft, fraud and non-compliance with anti-money laundering laws, specifically improper customer due diligence conduct. The Central Bank of Kenya appointed the Kenya Deposit Insurance Corporation as a receiver for Dubai Bank Kenya who in turn reported back to the regulator that the bank should go into liquidation.

UK FCA Fines Barclays Bank

The UK Financial Conduct Authority (FCA) has issued its largest fine to date (including those issued by the Financial Services Authority). Barclays Bank (Barclays) has been penalised with a fine of GBP 72,069,400 for failing to adhere to financial crime risk measures. GBP 52.3 million is a disgorgement of the revenue Barclays made when they knowingly breached compliance rules and GBP 19,769,400 is an additional penalty imposed by the FCA (following a 30% discount as Barclays agreed to an early settlement).
Barclays facilitated a GBP 1.88 billion transaction involving investments in notes backed by underlying warrants and third party bonds in 2011 and 2012 for high net worth clients, including politically exposed persons. The firm breached their own procedures and controls by failing to carry out the enhanced due diligence such a high risk transaction required – in favour of quick on boarding to maximise profit.

Examples of Barclays deficiencies include the insufficient gathering of customer information and a lack of transparency – details of the transaction remained confidential even within the firm and only hard copies of the due diligence records were kept whose whereabouts was not widely known – which inhibited Barclays ability to monitor the business relationship.

Although the FCA did not find evidence that financial crime had taken place, Barclays’ deliberate overlooking of financial crime risks was deemed wholly unacceptable.

Further information
If you would like a more detailed discussion on these or other enforcement actions, please contact:
Clare Curtis (CCurtis@cclcompliance.com)

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