The Financial Conduct Authority (FCA) has issued a £2,038,700 fine to TJM Partnership Limited for failing to ensure it had effective systems and controls to identify and reduce risks of financial crime and money laundering.
The trading and investment firm was found to not have adequate procedures, systems and controls in place to mitigate the risk of being used to facilitate fraudulent trading and money laundering.
The FCA revealed that the company’s due diligence was not met in relation to its clients of the Solo Group between January 2014 and November 2015. TJM also failed to apply its AML policies and did not correctly assess, monitor and mitigate risks of financial crime.
This becomes the largest fine of cum-ex trading the FCA has issued so far and the third case brought about by the UK watchdog.
TJM agreed to resolve all issues of fact and liability, which qualified them for a 30% discount under the FCA’s Settlement Discount Scheme.
Mark Steward, Executive Director of Enforcement and Market Oversight, stated: “TJM allowed itself to become involved in a self-evidently suspicious scheme of circular transactions that looked like shams.
“TJM demonstrated a complete lack of care and diligence in participating in these transactions of dubious purpose.”
TJM performed trading on behalf of the Solo Group’s clientele throughout the time period which was characterised by a pattern of purported trades, which are causes of suggestive financial crime.
The FCA finds that the trading pattern appears to have been carried out to allow arranging of withholding tax reclaims in Denmark and Belgium.
TJM executed trading to the value of approximately £59bn in Danish equities and £20bn in Belgian equities, receiving commission of £1.4m, which was a ‘significant’ proportion of the firm’s revenue in the period.
This in turn led to the attention of the FCA, particularly after the firm failed to identify any form of financial crime or money laundering risks.
The investigation process involved proactive engagement with law enforcement agencies and regulatory partners around the world.