Tag Archives: financial sanctions

Bank Regulation and Money Laundering

By Prof Keith Stanton, Professor of Law (University of Bristol Law School).

© FCA

© FCA

It has not been a good few weeks for the banking industry. In America Wells Fargo has been rocked by a scandal in which staff have been found to have fraudulently opened accounts for customers as a way of meeting sales targets.  Deutsche Bank has teetered on the brink of disaster as a result of the size of the penalty it is facing in the US for misselling mortgage bonds. In Singapore the Monetary Authority has penalised two banks for anti-money laundering failures and control lapses and has withdrawn the license of a third bank for such failures.  For once, the major UK based banks have been out of the headlines.  However, the Financial Conduct Authority has added to the picture by penalising the Bangladeshi Sonali Bank (UK) Ltd £3.11 million and Steven Smith, the bank’s Compliance Officer and Money Laundering Reporting Officer (MLRO) a further £17,900 for anti money laundering (AML) failures. The bank was also prohibited from accepting deposits from new customers for a period of 168 days and Smith prohibited from performing a range of functions in the industry.

The Sonali Bank decisions are further examples of the FCA using its enforcement powers to send messages to the industry.  It is part of the attempt to change the culture in banking and to reduce, if not eliminate, risk which might threaten the integrity of the banking system as a whole. It is widely accepted that money laundering poses a significant threat to the integrity of the financial system. As a result, firms are required to adopt rigorous controls aimed at minimising the risk of money laundering occurring. The facts of Sonali concerned these AML obligations. The case is a good example of the fact that the criminal offences which are commonly said to place banks under a stringent obligation to guard against money laundering are, in practice, of much less significance than regulatory action concerning failures taken by the FCA. Continue reading

Immigration enforcement in the Byron aftermath: The legal limits of what can be required from employers

By Dr Katie Bales, Lecturer in Law (University of Bristol Law School).*

36b0c79400000578-3714197-image-a-24_1469780776407In July 2016 the Byron hamburger chain colluded with Home Office officials in setting up immigration raids on their workforce which resulted in the arrest and detention of 35 of their workers. Following mass protests over their actions, Byron released a statement declaring that the firm ‘was unaware that any of our workers were in possession of counterfeit documentation’. Despite the fact that ‘vigorous right to work checks were carried out’, Byron claimed that ‘sophisticated counterfeit documentation was used’ by the workers meaning Byron had no idea that those individuals were without the right to work. Byron also claimed that they were under a ‘legal obligation’ to cooperate with the Home Office, suggesting that cooperation with Immigration enforcement was mandatory as opposed to voluntary.

A recent report from Corporate Watch indicates that this type of collusion is not uncommon as immigration enforcement officials often use financial sanctions as a threat to coerce employers into helping with their investigative and arrest operations. The financial sanction referred to exists in the form of a ‘civil penalty’ which stands at £20,000 per worker that is found to be working ‘illegally’ without the right to work. Discounts are made however where employers cooperate with the Home Office. A £5,000 discount will be made for example, where employers report workers and a further £5,000 for active cooperation, a full list of these discounts can be found in the Home Office code of practice on the civil penalty scheme for workers.

The questions raised by the Byron press release and the further report from Corporate Watch concern the extent of the legal obligations placed upon employers in terms of immigration enforcement. Are employers legally obliged to set up ‘arrest by appointment’ meetings for staff for example? And do any of the legal obligations owed to employees or workers conflict with those related to immigration enforcement? Continue reading