1. NEW UK TRANSPARENCY LAWS

i. New laws announced in the Queen’s Speech revealed the British Government’s intention to fight corruption by establishing a register of company beneficial ownership. The announcement follows the Government’s Response to the BIS Consultation, ‘Transparency and Trust’, which confirmed the Government’s intent to legislate for such a registry (see our bulletin on the consultation response).

ii. The proposal is also aligned with likely developments at EU level; the current draft of the fourth EU Money Laundering Directive (currently under negotiation at EU level) contains a requirement for member states to adopt a register of beneficial ownership of companies and trusts.

iii. The Queen’s speech also announced a new Serious Crime Bill “to tackle child neglect, disrupt serious organised crime and strengthen power to seize the proceeds of crime”.

2. SERIOUS CRIME BILL AND ANTI-CORRUPTION PLAN

i. The Home Secretary has announced plans to publish a cross-government anti-corruption plan which will clearly set out the actions being taken by the UK to tackle corruption both at home and overseas. The aim is to ensure that organised criminals can no longer depend on bribery and corruption.

ii. In a speech, the Home Secretary also announced that the Serious Crime Bill will create a new offence of participation in an organised crime group. This offence will carry a prison sentence of up to five years and the proceeds of crime will be confiscated.

iii. The offence will be directed at, inter alia, professionals who facilitate the activity of such groups and will “allow the NCA and the police to go after those who knowingly make money from organised crime while turning a blind eye”.

3. UK CONVICTS NINE IN £70 MILLION BOILER ROOM FRAUD

i. Nine men have been convicted in relation to what is believed to be the largest boiler room ever pursued by a UK authority.

ii. Along with seven other men who were convicted last year, two further men, Jeffrey Revell Reade and Anthony May were both convicted last week of one count of conspiracy to defraud in connection with the same conspiracy.

a. A boiler room fraud involves a business, often from overseas, persistently pushing the urgent sale of over-valued or even worthless shares in a company.

b. From 2003-2007, a total of around £70m was obtained fraudulently from UK investors under a boiler room fraud scheme masterminded by Australian, JeffreyRevell-Reade.

c. The scheme involved sales entities operating from Madrid who sold shares in U.S. listed companies to investors with restrictions on their resale for a 12 month period or shares in shell companies.

d. Six other UK citizens who ran the boiler rooms in Madrid have been sentenced to between three and seven years imprisonment.

e. The SFO stated that over 1,000 UK investors were defrauded by the activities of the nine men causing substantial financial damage and hardship. The convictions of these nine men mark the culmination a seven year investigation.

4. TWO MORE GUILTY IN INNOSPEC CONSPIRACY TRIAL

i. the following have been convicted of conspiracy to commit corruption following an investigation by the Serious Fraud Office (SFO).

a. Dennis Kerrison, a former CEO of Associated Octel Corporation Ltd (subsequently renamed Innospec Limited) and

b. Miltiades Papachristos, former Regional Sales Director for the Asia Pacific region

ii. The convictions of Mr Kerrison and Dr Papachristos complete the SFO’s six year investigation into Innospec for bribing state officials in Indonesia.

5. BUREAUX DE CHANGE OWNER JAILED FOR LAUNDERING OVER £100 MILLION

i. A bureaux de change owner and two of his employees have been jailed for laundering £100 million of criminal cash through the business.

i. Criminal gangs brought bags of cash to the two bureaux de change in Victoria, London, which was exchanged for €500 notes which could easily be concealed.

iii. The defendants took a percentage of the cash and used their illegal profits to buy properties in the UK, France and India as well as financing private schooling for their children.

6. FATF TARGETED FINANCIAL SANCTIONS EXPERTS’ MEETING

i. The Financial Action Task Force (FATF), together with relevant bodies from the United Nations, organised an Experts’ Meeting on Targeted Financial Sanctions. Representatives from 51 countries and 16 organisations attended the meeting and discussed various topics in relation to financial sanctions, including the need for collaboration between relevant bodies and the levels of compliance with targeted financial sanctions.

ii. The United Nations and FATF will continue to hold annual meetings.

iii. The next meeting will be in New York in December 2014.

7. STATEMENT ON UK/IRAN RELATIONS

i. Foreign secretary, William Hague, has announced the government’s intention to reopen the British Embassy in Tehran. The embassy will reopen with a small initial presence as soon a range of practical issues have been resolved. The initial embassy presence will only be able to offer a limited range of services. Iranians will still need to apply in Abu Dhabi or Istanbul for visas to travel to the UK. It is expected that the Iranian government will also take steps to reopen its embassy in London.

ii. Separately, negotiations between the P5 +1 and Iran in relation to the possibility of further sanctions relief when the ‘Geneva agreement’ expires in July 2014 are reportedly continuing.

8. RUSSIA/UKRAINE: NOTICE TO EXPORTERS – CHANGES TO OGEL

i. The Foreign Secretary has announced a suspension of all extant licences and application processing for direct export to Russia of military and dual use items destined for units of Russian armed forces or other state agencies which could be used against Ukraine. Russia has been added to the list of prohibited destinations for the following Open General Export Licences (OGEL):

a. Open General Export Licence (Export for Repair/Replacement under Warranty: Military Goods)

b. Open General Export Licence (Military Goods: for Demonstration).

9. RUSSIA/UKRAINE: FURTHER SANCTIONS

i. On 25 June the EU introduced further sanctions in connection with the situation in Ukraine, including an import ban on Crimean-origin goods. The US has also designated further individuals, who are reportedly Ukrainian separatists.

10. UKRANIANS CHALLENGE EU SANCTIONS

i. Nine Ukrainian individuals listed by the European Union in its targeted sanctions related to Ukraine have lodged applications to annul their listings at the General Court of the European Union in Luxembourg. Delisting cases can take several years and the sanctions remain in force against these individuals in the interim.

11. QUARTERLY REPORT ON THE OPERATION OF THE TERRORIST ASSET-FREEZING ETC. ACT 2010

i. The quarterly report to Parliament on the operation of the UK’s counter-terrorist asset freezing regime has been published. The report covers the period from 1 January 2014 to 31 March 2014. The report also covers the UK implementation of the UN Al Qaida asset freezing regime and the operation of the EU asset freezing regime in the UK under EU Regulation (EC) 2580/2001 which implements UNSCR 1373 against external terrorist threats to the EU.

12. AMENDMENTS TO THE FC GUIDE: BANKS’ CONTROL OF FINANCIAL CRIME RISKS IN TRADE FINANCE

i. The FCA has published a summary of feedback received on its recent consultation on good and poor practice in ‘Banks’ control of financial crime risks in trade finance’ (FG14/5). The FCA has amended its regulatory guidance, Financial Crime: a Guide for Firms, as set out in the handbook instrument published alongside the feedback. The guidance took effect on 12 June 2014.

13. JMLSG GUIDANCE FOR MONEY SERVICE BUSINESSES

i. The Joint Money laundering Steering Group (JMLSG) has updated its guidance in respect of money service businesses (as customers of banks) and the guidance has been submitted to HM Treasury for ministerial approval.

ii. The guidance is accompanied by a copy of the final guidance marked up for changes from the consultation draft.

14. FCA ANTI-MONEY LAUNDERING THEMATIC REVIEW

i. In a recent newsletter the FCA confirmed that it is carrying out a thematic review of smaller banks’ anti-money laundering controls. The FCA indicated

that significant weaknesses continue to be found in banks’ money-laundering risk assessment and management policies and procedures. The FCA will publish a report on its findings later this year.

15. COMMISSION REQUEST FOR TECHNICAL ADVICE ON MAR

i. The European Commission has published a request to ESMA for technical advice on implementing acts relating to the Market Abuse Regulation (MAR).

ii. The implementing acts are required to specify the procedures to enable reporting of actual or potential infringements of MAR to competent authorities.

This includes the arrangements for reporting and for following up reports, measures for the protection of persons working under a contract of employment,

and measures for the protection of persons working under a contract of employment, and measures for the protection of personal data.

iii. The request also encourages ESMA to indicate guidelines and recommendations that it believes should accompany the implementing acts to better ensure their effectiveness.

16. THE INTERNATIONAL TAX COMPLIANCE (UNITED STATES OF AMERICA) REGULATIONS 2014

i. The International Tax Compliance (United States of America) Regulations 2014 have been published. The Regulations implement the US/UK agreement in respect of the Foreign Account Tax Compliance Act (FATCA). They replace earlier 2013 Regulations to reflect a number of minor changes to the US domestic legislation, as set out in the explanatory memorandum.

17. FCA FINES BANK £26 MILLION IN RESPECT OF BENCHMARK RELATED FAILINGS

i. The FCA has imposed a fine of £26,033,500 on a bank for systems and control failings, and for failing to adequately manage conflicts of interest between itself and its customers, in relation to the Gold Fixing.

ii. A former trader has also been fined and banned for inappropriate conduct.

iii. The FCA expects that all firms should look hard at their reference rate and benchmark operations to ensure that such conflicts of interest are being appropriately identified, mitigated and managed.