Waking the tiger

And so we come to the end of the first week of business for the UK’s new Financial Conduct Authority.  RIP FSA, and long live (at least until the next government comes along) the FCA and the Prudential Regulation Authority.  The man at the helm of the FCA is Martin Wheatley, fresh off the boat from Hong Kong’s Securities and Futures Commission, and I am relieved to see Tracey McDermott moving over from the FSA’s Enforcement and Financial Crime Division.  For Miss McDermott was one of very few things about the FSA that I liked.

What it comes down to is this.  I am tired of having to apologise for the FSA – and by extension, for the UK’s AML regime and its enforcement – whenever I speak to people in other jurisdictions.  Why, they ask with much justification, was no-one ever prosecuted over the Abacha money?  Why have so few UK financial professionals served time for money laundering – and certainly no-one senior?  How dare the UK claim to adhere to high AML standards (and criticise others for apparently failing to do so) when its own regulator is a toothless tiger?  And I have no good answers for them, because the sad truth is that I have been disappointed by the FSA, over and over again.  But because I am an optimistic little soul – and because I cannot bear the thought that it might not be so – I am prepared to believe that the FCA will be different, and that it will both bare and use its regulatory teeth, sinking them with relish into money launderers.  Although I may come to regret my wish: that wise fellow Chairman Mao warned, “When you wake a tiger, use a long stick.”

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6 Responses to Waking the tiger

  1. Roy McCarthy says:

    Is the UK enforcement regime weaker than in other developed economies Susan? For example, few if any in Ireland have ever been brought to book for white-collar crime even after all that’s happened there.

  2. Dear Roy
    Well, I have limited practical experience of other jurisdictions and can go only by the number of convictions – which, as you say, is uniformly lamentable.
    What I have found disappointing is the FSA’s lack of engagement with industry – certainly with regards to AML (I cannot comment on their many other responsibilities). They have seemed remote and uninterested, and rather unwilling to provide practical guidance (e.g. on “adequate procedures” for anti-bribery and corruption).
    What does anyone else think? Am I being fair, or do I just expect too much?
    Best wishes from Susan

  3. I just came across this story, which suggests that the pattern of prosecuting the small fry and not the enabling institutions and their senior staff is repeated in Hong Kong: http://www.chicagotribune.com/business/sns-rt-us-hongkong-launderingbre9360ch-20130407,0,4509270.story .

  4. ddd4182 says:

    I saw a presentation about 3 years ago where Mr Banks from the Mary Poppins film was quoted:
    “A British bank is run with precision
    A British home requires nothing less
    Tradition, discipline and rules must be the tools
    Without them – disorder! Chaos!
    Moral disintegration
    In short we have a ghastly mess”

    The dying embers of the FSA produced a guide for firms on Financial Crime which was just a collection of out of date thematic reviews with examples of good and bad practice. The FSA then stated that the guidance was not binding and they would not presume that a firms departure from the guidance indicated that it had breached the rules.

    Maybe you won’t need a long stick when you wake that toothless tiger.

  5. Thank you for your excellent comment.
    “Mary Poppins” is one of my favourite films – the scenes in the bank are tremendous! Like you, I have found the FSA’s comments on “binding” and “advisory” to be confusing – no wonder the courts have washed their hands of it in the past. Hand me that sharpened stick!
    Best wishes from Susan

  6. Pingback: Passing the AML parcel | I hate money laundering

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