Investment Bank Fined by FCA for Failing with Due Diligence Requirements

Richard Marley
May 07, 2021
2 minutes read
165

An Investment Bank in London, Sapien Captial, has been penalised by the financial regulator, Financial Conduct Authority, with a fine of up to £178,000 after it failed to comply with proper due diligence requirements. It is alleged that the investment bank was likely playing a part in financial crime.

The boutique investment bank has failed to properly place systems to find and eliminate the financial risks. It did not take any measures from being used by the fraudsters for illegally trading and laundering money. It did not take any measures to prevent money laundering and illegal trading by the Solo Group.

According to FCA, “The Solo Group trading was characterised by what appeared to be a circular pattern of extremely high-value trades undertaken to avoid the normal need for payments and delivery of securities in the settlement process.”

The way the trades were carried out by the Solo Group and its clients indicated financial crime and they were undertaken to develop an audit trail to hold back tax claims in Denmark and Belgium. Sapien carried out OTC equity trade of £2.5bn equities in Denmark and a value of £3.8bn in equities in Belgium.

The Financial Conduct Authority did not find any proof of shift of ownership of the shares that Solo clients traded. They did not even find the trade shares and settlement of the Solo Group.

Mark Steward, director of enforcement and market oversight at the FCA, said: “These transactions ran money laundering and other financial crime risks which Sapien incompetently failed to see. The FCA expects firms have systems and controls that test the purpose and legitimacy of transactions, reflecting scepticism and alertness to the risk of money laundering and financial crime, and failures here constitute serious misconduct.”

According to the FCA, this trading of Solo Group can be related to the cum-ex trading. The cum-ex scandal resulted in the loss of billions of euros for Germany, Denmark, France, and Italy. The scandal led to many raids, arrests, and court cases and dragged down many of the big names in the financial world.

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Connect with a KYC Expert

Investment Bank Fined by FCA for Failing with Due Diligence Requirements

How Much Have Australians Lost to Scams?

How do Online Recruiting Scams Work?

Spotting the Signs of Recruitment Fraud

High Profile Criminal Cases of Recruitment Fraud

1. Europol Arrested a Gang Involved in €20 Million Employment Fraud

2. Hampton Gang Member Convicted for Pandemic Employment Fraud

Talent Acquisition Fraud and the Role of Law Enforcement Authorities

1. FBI Issued Instructions to Avoid Employment Scam

2. UK Government – Raising Awareness of Employment Scams

How Shufti Pro can Help

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