Just as the financial services industry was beginning to rebuild its reputation it was shaken by another scandal. The ‘Panama Papers’ scandal has rocked the financial, political and legislative landscapes to their core. As the aftershock continues to be felt, the scale of complexity is still unravelling. Financial regulators will continue to weave a complex web of rules and regulations designed to protect the industry and its consumers.

In 2015, the FCA issued its highest-ever fine, at £284m. Some of the world’s largest and best-known financial institutions were held accountable for opening up their organisations and clients to unnecessary and avoidable risk.

Firms were pulled up on: (i) a lack of due diligence into politically exposed persons and their transactions; (ii) failing to report or accurately report transactions; (iii) failing to control foreign exchange business practices; (iv) failing to pick up on risks associated with confidentiality, conflicts of interest and trader conduct; (v) failing to carry out appropriate money laundering checks such as establishing the purpose of a fund, and corroborating its source; (vi) breaching principles for approved persons; (vii) breaching disclosure and transparency rules; and (viii) failing to take reasonable care to organise and control their affairs responsibly and effectively with adequate risk management systems.

Are the organisations affected emerging unscathed from such fines? What steps can they take to minimise the impact on their reputation – and crucially, on their customers?

Jul-Sep 2016 Issue

Pitney Bowes