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Record-high overseas information requests increases burden on financial sector

'Disruptive' and 'expensive' process should lead to increased diligence checks, says RPC partner

18 January 2016

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The Financial Conduct Authority (FCA) has received a record number of information requests from overseas- increasing the compliance burden on UK based financial services companies.

In 2015, 1073 requests for assistance were made by foreign enforcement agencies, an increase of 4 per cent on 2014 (1032), and 14 per cent on 2013 (942).

A global financial hub, London attracts financial crime and invites simultaneous investigations from multiple regulatory agencies, which UK financial services businesses are obliged to cooperate with under the FCA.

Richard Burger, partner at law firm RPC, commented: 'As a result of these requests UK financial services businesses can be required to produce data about their own or their clients' actions at the drop of a hat.'

'This can be extremely disruptive for firms and therefore expensive, which should act as an additional incentive for firms to undertake robust due diligence on their clients,' he said.

While FCA requests have risen, requests originating from US law enforcement agencies have fallen 18 per cent since 2013. RPC attributes this to investigations into Forex manipulation and LIBOR rigging being concluded.

Investigations coming to light recently include suspected criminality occurring partly in the UK, such as the manipulation of precious metals prices allegedly happening simultaneously in the UK and Switzerland.

The ongoing investigations in Australia and New Zealand into criminality in the Forex markets may have also involved UK individuals.

Burger opines that not all of these the requests concern wrongdoing by UK individuals or businesses directly but 'UK businesses unwittingly facilitating illicit transactions of overseas counterparties'.

He said: 'Financial crime is increasingly a cross border issue and so international co-ordination between regulators is crucial to effective enforcement.

'UK regulators are very happy to oblige their international peers, and information requests from overseas can often lead to the FCA starting its own investigations,' Burger added.

Categorised in:

Regulators White collar crime Financial services & Tax