The UK’s Financial Conduct Authority has levied a fine of £178,000 ($248,746) on Sapien Capital Ltd. for AML failings that could have enabled fraudulent trading and money laundering. Sapien lacked the proper controls and procedures to detect and mitigate the risk of enabling fraudulent trading and money laundering during February-November 2015. These risks were posed by business introduced by the Solo Group.
The Solo trading involved a circular pattern of very high value trades and the use of Over the Counter (OTC) equity trading, securities lending and forward transactions. It further involved EU equities on or around the last day securities were cum dividend. The machinations and nature of these Solo Group trades indicated a high possibility of financial crime. These trades seem to be a means of creating an audit trail as evidence for withholding tax reclaims in Denmark and Belgium.
Sapien conducted OTC equity trades valued at over £2.5 billion ($3.49b) in Danish equities and £3.8 billion ($5.31b) in Belgian equities. Moreover, it did not conduct its due diligence in implementing AML policies and procedures. It also failed to adequately evaluate, monitor and mitigate the risk of financial crime posed by Solo Group clients and their trading operations.
Sapien agreed to address all issues by entering into a Focused Resolution Agreement with the FCA, which qualified it for a 30% discount. However, on account of Sapien’s financial hardship, the FCA decided to reduce the fine amount further £219,100 ($306,181) to £178,000 ($248,746).
Source: Financial Conduct Authority, UK