The TJM Partnership Limited is fined £2 million by the FCA for financial crime control failings

Jul 28, 2022 12:00:00 AM

What has happened?

In July 2022, the FCA fined The TJM Partnership Limited (in liquidation) £2,038,700 for failing to ensure that it had effective systems and controls in place to identify and reduce the risk of financial crime and money laundering in its business.

This was the third case brought by the FCA in relation to cum-ex trading1 and the largest fine imposed so far. This reflects the multiple examples of serious misconduct over a lengthy period.

1 a trading method used to engineer multiple refunds for withholding tax paid on a dividend. Typically, company shares are sold or swapped prior to a dividend payment in order to produce two tax refunds in respect of one underlying withholding tax payment.

What are the key points surrounding the firm’s financial crime compliance?

TJM did not have adequate procedures, systems, and controls to identify and mitigate the risk of being used to facilitate fraudulent trading and money laundering in relation to trading on behalf of clients of the Solo Group between January 2014 and November 2015. It also failed to adequately apply its anti-money laundering policies and it did not properly assess, monitor, and mitigate the risk of financial crime.

Trading executed by TJM on behalf of the Solo Group’s clients throughout the period was characterised by a circular pattern of purported trades – characteristics that are highly suggestive of financial crime. The trading appeared to have been carried out to allow the arranging of withholding tax reclaims in Denmark and Belgium. TJM executed trading to the value of approximately £59 billion in Danish equities and £20 billion in Belgian equities and it received a commission of £1.4 million, which was a significant proportion of the firm’s revenue in the period. The firm also failed to identify or escalate any potential financial crime concerns and money laundering risks in two other instances related to Solo Group business. This involved transactions with no apparent economic purpose except to transfer substantial windfall profits of €4.3 million amongst its clients. TJM also accepted payment from a third party without appropriate due diligence.

How can we help you?

If you’d like to know more about how we can help you with your financial crime compliance, or any other regulatory compliance issues, our specialist team is here to help.

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