Yudu - Journey to the FCA

TAKING ACTION AGAINST FIRMS THAT DO NOT MEET OUR STANDARDS

We believe an important way of keeping our markets clean is to keep criminals and unscrupulous characters out of the industry. We need people who own and manage the firms we regulate to be people of integrity.

Scrutinising the industry We will look at how firms prevent abuse by criminals and question whether they are doing enough. Three important financial crime risks are:

• Fraud: we will use a range of techniques to see if financial firms have strong enough defences, in particular to help prevent frauds against consumers, such as ‘boiler rooms’ and Ponzi schemes.

• Money laundering: we will look at the steps firms take to detect and prevent money laundering, particularly focusing on high-risk customers and products. We will continue touse thematic reviews and targeted visits to test how the industry is improving practice in this area following recent FSA supervisory work and enforcement action, which found serious deficiencies. We will also devote more resources to ensuring the biggest retail and investment banks are complying with their legal and regulatory obligations through our Systematic Anti-Money Laundering Programme – a cycle of in-depth reviews of anti-money laundering and sanctions systems and controls. We will continue to make examples of firms who take unacceptable risks.

• Bribery and corruption: we will take action against firms that are found to be using corrupt methods, or failing to prevent bribes being paid to win business.

Protecting people from scams and swindles

We will take action against firms and individuals who unlawfully conduct activities (such as ‘boiler room’ frauds, land banking scams, rogue carbon trading firms and fraudulent collective investment schemes). We will alert the public to the dangers of such schemes and will help return funds to victims where the courts have been able to recover money from fraudsters.

In March 2012, the FSA won a High Court action against three land banks that had run a £32m scam, selling plots of land unlawfully to UK consumers. This followed action taken during 2011 to close down several land banking firms.

Education can be effective and long-lasting when it comes to helping consumers to avoid falling for scams and swindles, and we will continue to help consumers be aware of risks.

In April 2012, the FSA contacted over 76,000 people to let them know they were targets for fraudsters. Their names had appeared on lists recovered from companies that we believed were fraudulently selling investments in land or worthless shares. We also published information sheets and web pages on scams and swindles so the public could recognise and avoid them.

Cooperating with other agencies

We will work closely with other organisations both at home and overseas to combat financial crime, whether through contributing to international standard-setting bodies, sharing intelligence or developing partnerships to coordinate action and bring people to justice, particularly if such crime affects UK consumers or markets.

A criminal share-dealing operation defrauded £27.5m from 1,700 investors over six years. The trio responsible were sentenced to a total of 19 years in prison after a joint investigation by the FSA, the City of London Police and Eurojust, with assistance from over a dozen police forces and regulators. Joint working was essential to secure this result.

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Foreword by John Griffith-Jones

Introduction by Martin Wheatley: Our vision for the Financial Conduct Authority

Chapter 1: The creation of the FCA: Spotlight on some of our new powers

Chapter 2: Protecting the perimeter

Chapter 3: Ensuring firms continue to meet our standards

Chapter 4: Taking action against firms that do not meet our standards

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Chapter 5: Building our understanding of the markets

Chapter 6: Maintaining effective relationships

Chapter 7: Accountability, transparency and measuring our success

Annex A: Specific questions for consultation

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