Margaret Cole outlines the FSA’s financial crime agenda – On 19 November 2009, the FSA published a speech by Margaret Cole, FSA Director of Enforcement, on the FSA’s agenda for fighting financial crime.

In her speech, Ms Cole talked about the FSA’s “frontline” work as gatekeeper and supervisor in relation to financial crime, as well as its role as a criminal prosecutor.  Read more – www.fsa.gov.uk/pages/Library/Communication/Speeches/2009/1119_mc.shtml

Some key points of interest are summarised below.

Gatekeeper for the regulated sector – The FSA has built stronger links with overseas regulators, devoted greater resources to due diligence and adopted a more enquiring approach to vetting applications for authorisation in order to prevent new entrants to the regulated sector if there is any question relating to their fitness or propriety. The FSA is willing to prosecute those who seek to bypass the authorisation process to conduct regulated business in the UK.

Supervision – The way in which firms evaluate and manage all forms of financial crime risk will be considered by the FSA in supervisory visits. In relation to the risk of corrupt payments, Margaret Cole stated, “supervisors may in the future be asking whether a firm’s geographical reach, customer base, product lines, or sales channels make it vulnerable to the risk that staff pay or receive bribes. Firms that use go-betweens to generate new business in jurisdictions associated with systemic levels of corruption may receive particular attention. I would expect firms in this position to be actively implementing measures to mitigate the threat”. However, the FSA’s focus is on the prevention rather than prosecution of corruption offences; it will usually refer instances of corruption to the Serious Fraud Office for prosecution. The FSA will continue to take enforcement action against firms that have inadequate systems and controls to prevent financial crime.

Senior management responsibility – The FSA expects senior management to demonstrate leadership on financial crime issues and to take responsibility for mitigating those risks. It is important that suitably senior and independently-minded staff with sufficient resources are responsible for mitigating financial crime risks.

FSA prosecutions – The FSA does not aspire to be a general fraud prosecutor and frequently refers potential criminal cases to other, more appropriate, prosecutors. The FSA will continue to focus on prosecuting insider dealing, other market offences and unauthorised business, such as boiler room scams. Recent judicial authority (R v Rollins and R v McInerney) confirms that the FSA can prosecute money laundering offences and conspiracy in addition to insider dealing.