The total of notable FCA fines issued in 2023 is just shy of £53m. With the year all but wrapped up, 2023 has shown that lessons from past breaches have been learnt. That being said, the penalties that have been dished out hold significant weight.
Failure to have adequate anti-money laundering (AML) systems and controls in place has brought the risk of financial crime into the spotlight.
Top FCA fines in 2023
- ED&F Man Capital Markets Ltd - £17.2m
- Equifax Limited - £11.1m
- Guaranty Trust Bank (UK) Ltd (GT Bank) - £7.6m
- ADM Investor Services International Ltd - £6.4m
- Al Rayan Bank PLC - £4m
- Paul Steel - £3.6m
- Bastion Capital London Ltd - £2.4m
- Mark Antony Abley - £106k
We continuously track the largest Financial Conduct Authority (FCA) fines, including those from 2019, 2020, 2021 and most recently, 2022.
The biggest FCA fines 2023 in detail
1. ED&F Man Capital Markets Ltd (fined £17.2m)
Breaches of Principle 2 and Principle 3
The FCA has fined city broker ED&F Man Capital Markets Ltd. (MCM) £17.2m for serious failings in its oversight of a cum-ex trading strategy. This enabled the company to collect fees for trading strategies, which enabled clients to reclaim tax illegally.
MCM did not have adequate compliance checks and failed to ensure that the dividend arbitrage trading was legitimate. Furthermore, the broker neglected to take steps to understand the training activities or consider the risks of dividend arbitrage trading. This is the largest fine the FCA has issued for a cum-trading case.
2. Equifax Limited (fined £11.1m)
Breaches of Principle 3
The FCA has imposed a fine of just over £11 million ($13.6 million) on Equifax due to significant shortcomings that exposed millions of consumers to financial crime risks.
The regulator described the situation as "entirely preventable," highlighting Equifax's failure to promptly notify regulators and its misleading public statements regarding a security breach in 2017.
Originally, the fine was set at £15,949,200, but Equifax received a 30% discount for accepting the penalty early in the proceedings and a 15% credit for cooperation during the investigation. This fine followed the Information Commissioner's Office (ICO) imposing a penalty of £500,000 on Equifax in 2018, showing regulatory action over the data breach issue.
3. Guaranty Trust Bank (UK) Limited (GT Bank) (fined £7.6m)
Breaches of PRIN 3
The FCA has issued Guaranty Trust Bank (UK) Ltd (GT Bank) a fine of £7.6m following lapses in its AML systems and controls. The FCA found that the GT Bank failed to conduct sufficient customer risk assessments and often neglected to assess or document the money laundering risks to customers.
Furthermore, GT Bank failed to meet the regulation standard of monitoring customer transactions and business relationships. Following external and internal sources highlighting these regulatory lapses, the bank was unable to take appropriate action.
Since GT Bank did not dispute the FCA's findings, they have qualified for a 30% discount in their penalty.
4. ADM Investor Services International Ltd (fined £6.4m)
Breaches of Principle 3
The FCA has imposed a fine of £6.47 million (approximately $7.9 million) on commodities services broker ADM Investor Services International Limited for having insufficient anti-money laundering systems and controls in place.
The regulator cited the company's business operations and client base, which encompassed a global reach and included higher-risk individuals known as politically exposed persons, as factors contributing to significant money laundering risk.
The FCA had initially expressed concerns with ADM Investor Services International Limited in 2014, and subsequent inspections in 2016 revealed persistent shortcomings. These included the absence of a comprehensive money laundering risk assessment and policies that referred to outdated legislation.
However, by January 2018, the FCA decided to lift the requirements for remedial action at the company, which is a subsidiary of the Chicago-based multinational corporation Archer-Daniels-Midland Co (ADM.N).
5. Al Rayan Bank PLC (fined £4m)
Breaches of Principle 3
The FCA has issued a £4m fine to London-based bank Al Rayan Bank for failures in its AML rules. Over the period from April 2015 to November 2017, Al Bank did not carry out appropriate checks on money passing through the bank.
This failure means the firm didn't check the source of its customers' funds when required to ensure that the money was not linked to a financial crime. Despite the FCA raising its concerns, the bank failed to take appropriate action.
"The FCA will continue to raise the stakes for firms that do not take their financial crime responsibilities seriously, especially in preventing money laundering risks which harms confidence and integrity in our market and in preventing financial crime”.
6. Paul Steel (fined £3.6m)
Breaches of APER 1, 2 & 4, COCON 1 & 3
Paul Steel, a former advisor at Estate Matters Financial Ltd (EMF), has been fined a total amount of £3,694,400 after he provided unsuitable defined benefit advice. He has also been banned from working in financial services. The regulator found that Steel also lacked integrity in selling his client book for half its value to himself.
Steel's actions resulted in those negatively impacted by his advice being unable to pursue EMF for redress. After issuing the significant fine, the FCA agreed not to enforce it if Steel paid £850k to the Financial Services Compensation Scheme.
The regulator justified this by stating that without this settlement, all or most of Steel's assets would have been spent on the High Court proceedings, not compensating consumers.
7. Bastion Capital London Ltd (fined £2.4m)
Breaches of PRIN 2 & PRIN 3
The FCA has fined Bastion Capital London Ltd £2,452,700 for serious financial crime control failings relating to cum-ex trading. Upon investigation, the FCA found that the company failed to manage any risk of being used for fraudulent trading and money laundering.
Bastion, now in liquidation, facilitated over £70 billion in "cum-ex trades" of Belgian and Danish stock on behalf of the hedge fund Solo Group's clients. Upon investigation, the FCA found that between January 2014 and September 2015, Bastion executed trades that were highly suggestive of financial crime.
Bastion failed to take note of or ignored the red flags regarding these trades, which appeared to have no economic purpose other than to transfer funds from the Solo Group's controller to their business associates. The FCA stated that the company should have considered financial crime risks when onboarding the Solo Group clients and executing the trades.
8. Mark Antony Abley (fined £106k)
Breaches of APER 2
The FCA has banned Mark Abley of County Capital Wealth Management (CCWM) from providing advice on pension transfers. He was also fined £106,100, which will be paid to the Financial Services Compensation Scheme (FSCS).
CCWM advised 575 people to transfer out of their defined benefit pension schemes. This includes nearly 150 members of the British Steel Pension Scheme. Over half failed to meet the required standards - Abley was responsible for this advice, which shows a lack of competence.
"Mr Abley’s incompetence meant that he failed to give customers the advice they needed to make a significant decision about their retirement."
Abley failed to prove that the transfers were in the customers' best interest. There were also errors in the calculations used to compare existing pension schemes to the proposed plans to transfer to.
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