Schedule 2 of the Financial Services Act 1986 (FSA) was amended by s. 204(1) of the Companies Act 1989 to make it incumbent on self‐regulatory organisations (SROs) to have a…
Abstract
Schedule 2 of the Financial Services Act 1986 (FSA) was amended by s. 204(1) of the Companies Act 1989 to make it incumbent on self‐regulatory organisations (SROs) to have a satisfactory mechanism to take account of cost factors in compliance. Critically, however, published regulatory guidelines for the assessment of cost of compliance fail to address a key and fundamental quantitative aspect of the entire industry equation — that of people and the impact of a compliance based control administration upon their individual professional motivation. This paper attempts to evaluate critically such a compliance administrative control system on the employees of an FSA authorised financial institution.
The international banking and financial system is finding itself in the front line of the war being waged internationally against the money launderers. Traditional concepts of…
Abstract
The international banking and financial system is finding itself in the front line of the war being waged internationally against the money launderers. Traditional concepts of banking secrecy are being undermined as governments struggle to preserve the integrity of the banking system. The war is on a vast scale. The Financial Action Task Force (created in 1989 by the seven major industrial nations and the President of the European Commission) estimated that the amount of money being laundered through the financial system was US$85bn per year. The extent of the problem was recognised in the International Narcotics Control Strategy Report for 1993 which found that eight of the world's major money laundering states are located in Europe. Europe has responded to the growing crisis in the financial sector with the Money Laundering Directive which was due to be fully implemented across the Community by 1st January, 1993. The Directive which applies to credit institutions and financial institutions, including community based branches of non‐Community institutions, reflects a number of key international initiatives and attempts to harmonise the anti‐money laundering legislation of the member states, though with varied success. This paper reviews developments within the UK since the Drug Trafficking Offences Act 1986 which marked the beginning of the Governments campaign to deprive criminals of the fruits of their crime and which has culminated in parts I to IV of the Criminal Justice Act 1993 (CJA 1993), which received Royal Assent on 27th July, 1993. The key money laundering provisions of the CJA 1993 have been introduced piecemeal, but have all been in force since 1st April, 1994. The aim of this paper is to assess the significance and impact of the CJA 1993 and the Money Laundering Regulations upon securities houses' business and to examine related practical and managerial problems encountered as a result of the new legislation. It also questions in particular the role and responsibility of the compliance officer in relation to prevention.
After first examining what compliance is, the paper goes on to look at the demands of regulators on compliance offices and, in particular, the different advice and requirements of…
Abstract
After first examining what compliance is, the paper goes on to look at the demands of regulators on compliance offices and, in particular, the different advice and requirements of SROs. The author considers the lack of consistency shown by regulators over training and competence, money market dealers and investigative procedures, as well as the conflict between fiduciary duties and regulatory rides, before concluding that SROs need to co‐ordinate their approaches if the problems caused by regulatory disharmony are to be overcome.