Release Date: 15th July 2022
To access the original FCA document, click here.
Summary
The Financial Conduct Authority (FCA) fined The TJM Partnership Limited (TJM), now in liquidation, £2,038,700 on 15 July 2022 for breaching regulatory requirements between 29 January 2014 and 25 November 2015. This penalty includes £1,198,277 in disgorgement. The FCA found that TJM failed to have adequate systems and controls to prevent fraudulent trading and money laundering, particularly in relation to business introduced by the Solo Group, and did not exercise due skill, care, and diligence in applying its anti-money laundering (AML) policies.
Key Takeaways for Other Firms:
- Implement Effective Systems and Controls:
- Ensure robust systems and controls are in place to identify and mitigate the risk of financial crime.
- Regularly update and test these systems to adapt to new risks and regulatory requirements.
- Conduct Thorough Due Diligence:
- Perform comprehensive customer due diligence (CDD) and enhanced due diligence (EDD) where required.
- Gather adequate information about clients and their business activities, including their financial background and sources of funds.
- Monitor Transactions Diligently:
- Establish ongoing monitoring processes to detect unusual or suspicious transactions.
- Ensure that all transactions are consistent with the client’s profile and business activities.
- Address and Escalate Red Flags:
- Recognise and act upon red flags that may indicate potential financial crime.
- Escalate any concerns to the appropriate authorities or compliance departments.
Summary of Findings:
- Inadequate Controls and Due Diligence:
- TJM failed to properly assess and mitigate the risks associated with the Solo Group’s business, which involved purported OTC equity trades amounting to £78.26 billion.
- TJM did not conduct adequate due diligence on the Solo Clients or the trades executed on their behalf, leading to a high risk of financial crime.
- Lack of Transaction Monitoring:
- TJM did not have effective procedures for ongoing monitoring of transactions, failing to identify and address numerous red flags associated with the Solo Trading and Ganymede Trades.
- Acceptance of Suspicious Payments:
- TJM accepted a payment from Elysium Global (Dubai) Limited without proper scrutiny, despite multiple red flags and recent alerts from the FCA about potential issues with the Solo Group.
- Failure to Act with Due Skill and Diligence:
- TJM’s policies were inadequate, and staff did not follow even the limited procedures in place, exposing the firm to significant risks of facilitating financial crime.
In conclusion, the FCA’s action against TJM highlights the critical importance of maintaining robust AML systems, conducting thorough due diligence, and monitoring transactions diligently. Firms must ensure that they recognise and address red flags promptly to protect the integrity of the financial system and avoid significant penalties.
Back to the Dear CEO letter archives.