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Compliance News | Dec 2020

Posted by

David Mangion

on 16 Dec 2020

Compliance News | Dec 2020

Key compliance news including FB market abuse, DNB AML, EU pharma collusion, MUFC ransom, BlueCrest, Vitol bribery, nuisance brokers and more.

Our pick of key compliance stories this month

Facebook sued by US Government for 'predatory' conduct

In an unprecedented move, Facebook has been sued by the US government and 48 states and districts for abusing its market dominance. These landmark antitrust lawsuits claim that Facebook was wilfully seeking to crush smaller competitors and is seeking remedies which may include forced spinoffs of WhatsApp and Instagram.

New York Attorney General Letitia James noted in a press conference that the social media giant "used its monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users." She also pointed out that "it's really critically important that we block this predatory acquisition of companies and that we restore confidence to the market."

This marks the second notable US government offensive this year against seemingly untouchable tech giants. The US DoJ sued Google in October for abusing its dominant position as an online search portal and advertising behemoth. Apple and Amazon have also been investigated by Congress and federal authorities for alleged anticompetitive practices.

Free Competition Law Training Presentation

DNB faces fine for AML breaches

Norway’s biggest bank, DNB, is facing a fine of up to 400 million kroner (£34.4m) for breaching multiple anti-money laundering laws.

Oslo's Financial Supervisory Authority criticized DNB’s poor compliance with Norway's Anti-Money Laundering Act, warning that an administrative fine could possibly follow.

“The possible fine that DNB has been notified of is not related to any suspicions of money laundering or complicity in money laundering,” the bank said and were keen to stress that the fine will only apply to its operations in Norway.

This development comes a year after Norway's chief regulator criticised Norwegian banks for not playing by the rules designed to prevent money laundering from taking place within the banking industry. At the time, DNB was subject to a police investigation after allegations that it was used by an Icelandic fishing firm to launder money through operations in Namibia.

Key takeaways

  • Conduct initial and ongoing client due diligence using a risk-based approach with no exceptions
  • Look out for anything about any customer or transaction that is unusual or suspicious - pay particular attention to high-risk customers and jurisdictions
  • Report any knowledge or suspicion of money laundering to the relevant authorities immediately, and take no further action until authorised to do so
  • Avoid tipping off anyone who has been reported for money laundering or terrorist financing

Free 6AMLD Training Presentation

Teva and Cephalon fined €60.5 million for delaying the entry of generic medicine

The European Commission has fined Cephalon and Teva, two pharmaceutical giants, a total of €60.5 million for their agreement to delay for several years the market entry of a generic version of Modafinil, Cephalon's drug for sleep disorders, after Cephalon's original patents had expired.

Interestingly, this agreement had been concluded well before Cephalon became one of Teva's subsidiaries. Such an agreement is in direct violation of EU competition law and has caused substantial harm to EU patients and healthcare systems by keeping Modafinil prices artificially high.

Executive Vice-President Margrethe Vestager, head of competition policy, said that "It is illegal if pharmaceutical companies agree to buy-off competition and keep cheaper medicines out of the market. Even when their agreements are in the form of patent settlements or other seemingly normal commercial transactions. Teva's and Cephalon's pay-for-delay agreement harmed patients and national health systems, depriving them of more affordable medicines."

Free Compliance Culture eBook

Employers pledge to recruit 10,000 black interns

Some of the UK's most high-profile employers have pledged to collectively employ 10,000 black interns over the next five years.

The campaign aims to improve the work prospects of young black persons through paid internships in order to foster "a sustainable, growing expansion in the quality and quantity of opportunities for black people in the UK".

Interns will be employed for at least four weeks' worth of work experience and shall be paid no less than the living wage. This campaign was brought to life after the success of the investment industry’s 100 Black Interns initiative earlier in 2020, a campaign that saw 200 investment firms offering internships to black students in the UK.

This latest campaign is currently scheduled to commence in the winter of 2021 and the summer of 2022. The aim is for companies in over 20 different sectors to each offer 100 internships per year for five years, in order to reach the final goal of 10,000 black internships.

Free Promoting Equality Training Presentation

Manchester United won't rule out ransom after cyber attack

Manchester United are refusing to say whether or not they have received ransom demands over a recent cyberattack that forced them to temporarily disable their systems.

The club revealed that they had been struck by a "sophisticated" attack and that the issues have still not yet been fully resolved. What's more, there have also been reports in the media that cyber attackers have demanded "millions of pounds" in ransom payments.

According to club representatives, a motive for the cyberattack has still not been identified, but have been adamant that hackers no longer have any control over their systems.

While this attack is still causing the club a great deal of disruption, such as email accounts not working, it is understood that investigative and recovery work is now at an advanced stage.

Key takeaways

  • Always be vigilant - remember that access to corporate networks and data makes you a target for cybercriminals
  • Be cautious and even cynical about offers, demands and messages that are designed to arouse curiosity, anxiety or fears
  • Treat all unsolicited or unexpected requests with caution - challenge anything that is unusual or suspicious
  • The biggest risk comes from insiders, so take immediate action if you see anyone accidentally or deliberately putting your firm at risk

Free Cyber Security Training Presentation

BlueCrest to pay $170m over SEC claims

BlueCrest Capital Management Ltd. has agreed to a settlement to the tune of $170 million over allegations that it had been systematically misleading clients. The allegations relate to a fund that invested its traders' own money via an underperforming algorithm.

Back in its heyday, BlueCrest was among Europe's largest hedge-fund managers. However, the firm ceased managing money for outside clients in 2015 after a run of poor returns from its flagship macro fund and a sharp drop in assets. Yet, it carried on trading in its employees' own money.

According to SEC investigators, BlueCrest established the proprietary fund, BSMA Limited, back in 2011 before moving most of its best traders to work on it. Their work selecting assets for BlueCrest’s flagship fund was then replaced by an algorithm that was meant to replicate human decisions but ended up performing poorly.

Commenting on the case, SEC enforcement director, Stephanie Avakian said "BlueCrest repeatedly failed to act in the best interests of its investors, including by not disclosing that it was transferring its highest-performing traders to a fund that benefited its own personnel to the detriment of its fund investors."

Visit our FCA Compliance Course Library

Vitol pays over $135 million to resolve FCPA offences

Vitol Inc., the US affiliate of the Geneva-based Vitol group, has entered into a deferred prosecution agreement with the US DoJ to settle bribery charges relating to violations in Mexico, Brazil, and Ecuador. The 3-year DPA imposes a $135 million fine and agrees to credit $45 million for Vitol to pay to the Brazilian Ministério Público Federal.

Vitol and its co-conspirators were discovered to have paid over $8 million in bribes between 2005 and 2014 to no less than four officials at Brazil's Petrobras in exchange for inside information.

What's more, it was also revealed that Vitol was part of a second conspiracy to bribe officials in Mexico and Ecuador between 2015 and 2020. Here, the firm paid over $2 million in order to get their hands on business relating to the purchase and sale of oil products.

Key takeaways:

  • Never give or offer any inducement, nor request or accept one from others - keep in mind that bribery is a criminal offence and a predicate offence to money laundering
  • Make sure that any gift or hospitality you give or accept is proportionate, and in line with industry-standard policies and thresholds
  • Conduct due diligence on all third parties and make your company's stance on bribery clear.
  • Never attempt to disguise a bribe as something legitimate, for instance as a 'scholarship' or 'loan repayment'
    Free Anti-Bribery Good Practice Guide

Lincolnshire mortgage broker fined for sending nuisance texts

The ICO has fined OSL Financial Consultancy Limited £50,000 for illegally sending 174,342 nuisance marketing text messages.

The Lincolnshire-based firm was investigated by the ICO as part of its probe into UK firms trying to take advantage of the global pandemic with nuisance marketing messages. The ICO found that the firm had been flagged to the '7726' spam text reporting service a considerable number of times between March and June 2020.

The flagged messages were about a reduction in 'Buy to Let' mortgage interest rates. The ICO discovered that over 50,000 nuisance text messages were sent during the Covid-19 pandemic, while more than 120,000 nuisance texts were sent in the months before it started.

Investigators revealed that OSL had collected personal information from people who had contacted them for a quote and then used this information for marketing purposes. There was no option to opt-in or out of marketing texts. This is against electronic marketing law since valid consent had neither been sought nor obtained.

GDPR Course Library

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