Corporate Crime Insights - February 2025

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Corporate Crime Insights - February 2025

Corporate Crime Insights - February 2025

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February 25, 2025

Welcome to the February 2025 edition of Dentons' Corporate Crime insights, where the team pull together key updates and insights across the range of corporate crime compliance issues to inform your horizon scanning and current workstreams. As ever, the contents below represent the views of the Corporate Crime team and are designed to assist you. Should you wish to discuss any of the changes outlined below and how they might impact your business, then please feel free to reach out to any member of the team.

The primary focus for the compliance/financial crime functions of many of our clients to date this year has been planning for and scoping the work needed to put in place the "reasonable procedures" required to provide a defence to the new failure to prevent offence due to come into force on 1 September this year. We have spoken to and are working with a lot of clients, most of whom are at the risk assessment and planning stages, about how they are aiming to approach this work. The broad consensus is that this is a new compliance issue which will require a significant extension to current fraud controls, which are primarily aimed at fraud where the business is the intended victim. As a reminder, the new offence is focused on fraud which could benefit the business (or its customers) and so is likely to focus on misleading advertising, sales techniques and public statements.

AML

FCA findings reveal weaknesses in brokers' money laundering controls: The FCA's review of wholesale brokers followed its 2019 thematic review into money laundering risks in the capital markets.¹ The latest findings indicate that firms have made progress since 2019, but highlighted significant shortcomings.² These include firms generally underestimating the money laundering risks they face and placing excessive reliance on due diligence conducted by other parties in the transaction chain. There was also limited information-sharing between firms and, notably, 75% of wholesale brokers had neither refused nor exited a customer relationship, or filed a SAR with the NCA during the five years leading up to 1 October 2024. This statistic underscores the need for more proactive measures in identifying and addressing potential money laundering activities. To address these issues, the FCA has stressed the importance of strengthening systems, controls, risk awareness and MLTM-focused training.

Tackling money muling: insights from the FCA's recent review: The Dentons team has summarised the FCA's findings and recommendations for payment services firms in relation to money mules, which include concerns around inadequate customer due diligence, poor record-keeping and insufficient monitoring of flagged accounts.³ The FCA also emphasised the need for firms to refine their detection tools and improve collaboration to enhance fraud prevention. [For more information, check our Dentons update here.
Gambling Commission fines Admiral Casino for AML failures: Greentube Alderney Limited (trading as Admiral Casino) was fined £1 million following an investigation by the Gambling Commission (GC) which revealed social responsibility and anti-money laundering (AML) failures. The AML failings included:⁴
- inadequate customer due diligence and escalation: The GC identified that on several occasions Admiral failed to scrutinise the information provided by customers. For example, Admiral failed to promptly review a customer bank statement which showed complex and unusual transactions, including more than £100,000 being transferred in and out of the account and a negative closing balance. This statement was only escalated four months later;
- failure to follow its own policies and procedures: Admiral failed to apply enhanced due diligence measures to customers that it identified in its own policies as having a "risky occupation". This failure resulted in inaccurate customer risk profiles and no steps being taken to mitigate the associated risks; and
- poor investigations into transactions: Admiral in some instances was not investigating and escalating accounts which showed clear links to other accounts, which led to a failure to adequately mitigate risks. For example, Admiral failed to identify and escalate an account sharing the same address and surname as a blocked customer who had known convictions for the supply of Class A drugs.
Registration requirements under ECCTA for Authorised Corporate Service Providers: From 25 February 2025, firms who file information on behalf of clients with Companies House will be required to register as an Authorised Corporate Service Provider (ACSP) to continue providing these services. This will include Trust and Company Service, and other professional service providers, including accountants and solicitors, who are registered for AML purposes in the UK with any of the relevant AML supervisory bodies.⁵ In order to register, ACSPs will need to verify their identity, prove they are supervised by an AML body and pay a £55 registration fee.

FCA charged John Dance (ex-WealthTek manager): The FCA has charged John Dance with nine criminal offences, including multiple counts of fraud and money laundering. Mr Dance was a principal partner at WealthTek LLP and is accused of fraudulently abusing his position of trust for his own personal gain. The FCA asserts that Mr Dance transferred £64 million from client accounts into accounts under his control to fund an extravagant lifestyle. It is further alleged that Mr Dance laundered the illicit proceeds through his personal and business bank accounts. The transactions reportedly include £723,000 spent in 2019 to purchase six racehorses, property acquisitions totalling £806,500 in 2014 and £3.9 million in 2020 for residential and commercial properties.

The FCA noted that this case took 21 months from opening in March 2023 to the bringing of criminal charges (in 2023/24 the average time to close cases was 42 months). This timely conclusion is perhaps indicative of a more streamlined investigation process which may lead to more timely criminal outcomes moving forward.

FCA fines Arian Financial LLP £288,962 for lax financial crime controls: The FCA fined Arian Financial LLP (Arian) £288,962.53 for failing to implement effective systems and controls to prevent financial crime.⁶ Namely, Arian did not apply with due skill, care and diligence, its AML policies and procedures, hence exposing the firm to the risk of facilitating money laundering and fraudulent trading.

Arian executed approximately £37 billion in Danish equities and £15 billion in Belgian equities in purported over-the-counter equity trades for the Solo Group's clients, earning around £546,949 in commission. The trading activity was circular in nature, which is strongly indicative of financial crime and appeared to support withholding tax reclaims in Denmark and Belgium.

FATF annual report: For the first time since its development in 1990, the FATF adopted changes to its international standards on asset recovery, which strengthen the asset recovery toolkits that countries should have. These changes include enhanced powers to swiftly recover proceeds of crime, manage and preserve the value of seized assets, and foster better international co-operation to suspend suspicious transactions across borders.⁷The updated standards also introduce new measures such as the power to suspend transactions related to money laundering, terrorist financing and serious crime. Going forward, countries will need to demonstrate that:
- adequate resources are allocated to prioritise asset recovery and that systems are periodically reviewed to ensure ongoing effectiveness;
- competent authorities are identifying and tracing criminal assets, including property;
- provisional measures are actively and successfully sought;
- frozen or seized property is effectively managed;
- confiscation orders are obtained, based on criminal or non-conviction-based measures and successfully enforced to ensure deprivation of the proceeds of crime;
- victims are compensated, or property is returned to them;
- declaration or disclosure systems leading to the identification and confiscation of falsely or non-declared cash or bearer negotiable instruments, as well as cash or instruments related to money laundering or terrorist financing; and
- constructive and timely international co-operation on asset recovery, both formal and informal is sought and provided.
Former Goldman Sachs analyst, Mohammed Zina, was ordered to pay £586,711 by a judge at Southwark Crown Court on 29 January 2025. Zina was found guilty of insider dealing in 2024 and sentenced to 22 months in prison. The court determined that Zina had gained £1.1 million from his actions, which involved insider trading and fraudulently obtaining loans from Tesco Bank. He was ordered to repay the sum that could be recovered from his current assets. The case was prosecuted by the Financial Conduct Authority (FCA), who noted that "as well as prosecuting insider dealers, we will not allow them to keep any part of their illicit profits". This case marked the FCA's first insider dealing conviction in five years, following a period of reduced enforcement influenced by Covid-19 and backlogs in the courts. Since then, the number of cases has increased, with several currently progressing through the courts.

JMLSG published proposed revisions to Part I of AML and CTF guidance: The Joint Money Laundering Steering Group (JMLSG) has released proposed revisions to Part I of its AML and counter-terrorist financing (CTF) guidance. The proposed revisions include, among others, new provisions in respect of (i) outsourcing services, and (ii) group companies. In respect of group companies, the amendments set out the risk-based approach that firms should take when conducting Customer Due Diligence and Enhanced Due Diligence; namely, when dealing with another regulated firm within the same group, the level of due diligence should be determined on a risk-based approach. If the group company is subject to UK Money Laundering Regulations or equivalent, simplified due diligence may be acceptable. A full list of the proposed amendments can be found here. The deadline for response to the consultation is 28 March 2025.

Bribery, corruption and fraud

In December 2024, the Home Office and City of London Police announced that they have launched a new pilot Domestic Corruption Unit aimed at enhancing intelligence, leading proactive investigations and co-ordinating anti-corruption efforts. Reports from the National Crime Agency and National Audit Office highlighted gaps in the government's understanding of domestic corruption and called for a more cohesive approach. Speaking at the UK Finance Economic Crime Congress, UK Security Minister, Dan Jarvis, noted that "UK law enforcement doesn’t have the capacity to uncover and investigate cases" and the new unit will "lead proactive investigations, providing much needed capacity and a dedicated response where this has previously been lacking".⁸ It remains unclear what this means in practice for enforcement and whether the new unit will refer matters to the SFO, as well as conducting its own investigations. Anti-corruption charity, Transparency International UK, welcomed the announcement, saying that they "look forward to contributing to building a clearer intelligence picture of bribery and other forms of corruption in our country, and seeing police act on it".⁹

The Serious Fraud Office (SFO) continues to struggle with disclosure following recent acquittals and its internal review. It has recently conformed a technical issue in its current system, which it says has been resolved, as well as commencing a review of its past use of software which had search term limitations that may have affected disclosure. While no evidence has yet been found undermining any convictions, further enquiries are ongoing.

On 17 January 2025, the SFO announced that it had secured its first Unexplained Wealth Order to investigate a £1.5 million Lake District property owned by Claire Schools, ex-wife of Timothy Schools (a solicitor convicted of fraud and sentenced to 14 years in prison in 2022).¹⁰ The property is suspected to have been purchased with proceeds from the £100 million fraud. Ms Schools must provide evidence of how the property was purchased within 28 days. SFO Director Nick Ephgrave called the case a "milestone."

In the US on 10 February 2025, President Trump signed an Executive Order which paused all new enforcement activity under the Foreign Corrupt Practices Act 1977 (the FCPA). It also means that all existing investigations under the FCPA will be subject to review. In practice, the order means that all new FCPA enforcement actions will be postponed for a minimum period of 180 days and new enforcement guidelines designed to "prioritise American interests and American economic competitiveness" will be published. For US-based companies, it is important to note that FCPA violations during this time could still be prosecuted by the next administration. It should also be noted that various jurisdictions operate their own anti-bribery regimes, including the UK's Bribery Act 2010, and US companies could find themselves subject to enforcement action under such legislation. Similarly, UK-based companies with operations in the US should bear in mind the jurisdictional reach of UK bribery legislation. Read our US colleagues' full update here.

Chief Executive of the FCA, Nikhil Rathi, has warned that proposals to ease mortgage rules could lead to an increase in cases of defaults and fraud. The FCA recently addressed government requests for regulators to foster growth in the mortgage market by setting out a series of regulatory changes planned for implementation in 2025, including a proposal to slash requirements for banks to check customers' identities. Rathi, however, warned that "there could be more money mules that get through the system" and called on parliament to provide the FCA with a "metric for tolerable failure" to define an acceptable level of consumer harm.

On 11 February 2025, UK Finance published its industry guidance on the new Failure to Prevent Fraud offence under the Economic Crime and Corporate Transparency Act 2023.¹¹The sector-specific guidance is designed to assist financial services firms understand and implement reasonable prevention procedures proportionate to their risk profile and industry-specific activities. While the Home Office guidance, published in November 2024, set out that it would "rarely" be reasonable to not even have conducted a risk assessment, UK Finance's guidance sets some circumstances where it may be arguable that it would not be reasonable for financial services firms to have prevention procedures in place. Examples of such activities include where there is no UK nexus for the firm or where distributors are subject to MiFID II or equivalent regulatory controls. However, UK Finance's guidance does stress that where there is a conflict between its guidance and the original Home Office guidance, then the latter should always take priority.

UK sanctions

On 5 December 2024, the Sanctions (EU Exit) (Miscellaneous Amendments) (No. 2) Regulations 2024 came into force, implementing stricter reporting requirements on relevant firms and involved persons to report suspected breaches. It also includes an expanded definition of relevant firms to cover new sectors such as insolvency practitioners. The regulations also require all UK persons holding funds or economic resources owned, held or controlled by a designated person to provide annual reports to OFSI.¹² On 23 January 2025, the UK government amended its guidance on Syria sanctions to reflect these changes.¹³ For more information, check our update here.

On 17 December 2024, the UK government announced:¹⁴
- additional designations related to Russia's "shadow fleet", specifying 20 ships involved in transporting Russian oil and oil products to third countries and two entities;
- a joint statement by the Nordic-Baltic 8++ countries that the UK, Denmark, Sweden, Poland, Finland and Estonia will ask their respective maritime authorities to request relevant proof of insurance from suspected shadow fleet vessels.¹⁵

On 7 January 2025, the Office of Trade Sanctions Implementation (OTSI) released guidance documents: (i) guidance for exporters concerning sanctions evasion; and (ii) guidance concerning the No-Russia clause. The guidance concerning sanctions evasion highlights, among others, the key goods at higher risk of circumventing sanctions and the jurisdictions that ought to be considered for enhanced due diligence. The No-Russia clause guidance includes a template clause.

On 10 January 2025, the UK and US coordinated efforts to impose designations in the Russian oil sector¹⁶ and issued relevant general licences (e.g. to facilitate wind-down transactions).¹⁷ The UK and US designated two major oil producers, PJSC Surgutneftegas and Gazprom Neft, with the US also designating a further 28 subsidiaries of the two companies.

On 23 January 2025, the UK Economic Secretary confirmed that OTSI currently has 318 open investigations into potential breaches of UK Russia sanctions and has, since February 2022, investigated and closed 388 cases.¹⁸

EU sanctions

On 18 November 2024, the EU expanded its sanctions regime against Iran, including prohibitions on (i) the export, transfer, supply or sale from the EU to Iran of components used in the development and production of missiles and unmanned aerial vehicles (UAVs); and (ii) certain transactions with ports owned, operated or controlled by listed persons, or used to send Iranian UAVS, missiles or such components to Russia.¹⁹

On 16 December 2024, the EU adopted its 15th sanctions package against Russia, which includes several key measures:
- targeting an additional 52 vessels from Russia's shadow fleet;
- designating 54 individuals and 30 entities;
- adding 32 entities to the list of those supplying Russia's military and industrial complex, making them subject to stricter export restrictions for dual use goods and technology, and advanced technology items; and
- extending time-limits for certain existing derogations e.g. to allow for EU operators to divest from Russia.²⁰
On 10 January 2025, the European Commission disbursed the first €3 billion of its €18.1 billion Macro-Financial Assistance (MFA) loan to Ukraine, which will be repaid using profits from frozen Russian Central Bank assets in the EU. This MFA loan is part of the G7's Extraordinary Revenue Acceleration loans initiative, which collectively aims to provide approximately €50 billion in financial support to Ukraine.²¹

Internal investigations and whistleblowing

The SRA published its finalised guidance on internal investigations in November 2024, aimed at in-house solicitors. The concepts flagged – independence, managing stakeholders, recording evidence and reporting – are not new and it is ultimately the SRA's "opinion" so is not binding. However, it serves as a helpful reminder of the key elements of a good investigation, during a time when a number of internal investigations have faced significant public criticism.

Resistance continues to the FCA's plan to name firms facing FCA enforcement action before their investigation has finished. This plan features as part of their proposed updates to the Enforcement Guide, as outlined in Consultation Paper CP24/2 (Part 2). The House of Lords Financial Services Regulation Committee was explicit with its feedback, entitling its report (published on 6 February 2024): "Naming and shaming: how not to regulate". It has called on the FCA to "withdraw the proposals if it has not found an acceptable balance between realising the potential benefits for consumer protection and managing the potential risks to firms, individuals and market stability". It has also requested that the regulator "publish a 'lessons learnt' document reviewing the appropriacy of its internal processes and communication strategies for consulting on a change of this scale and setting out measures to prevent similar mistakes in future." It remains to be seen whether the reaction from both industry and government will significantly curtail the regulator's plans.

The Employment Rights Bill currently before Parliament marks a significant shift in workplace protections, with sexual harassment now recognised as a protected disclosure under whistleblowing laws. Firms will need to ensure their whistleblowing frameworks can adequately handle allegations of harassment, while safeguarding employees from retaliation. The expansion of whistleblower protections reinforces the importance of robust internal reporting mechanisms, as failure to address concerns effectively could lead to serious consequences. Organisations should assess their policies to align with these changes, ensuring that internal investigations into workplace misconduct are handled with the necessary independence and thoroughness.
Regulatory focus on ESG continues to grow, with new disclosure standards placing increased pressure on firms to ensure that sustainability-related claims withstand scrutiny. The Sustainability Disclosure Requirements (SDR) and labelling regime, introduced by the FCA in 2024, together with the EU Corporate Sustainability Reporting Directive, as well as the proposed UK Sustainability Disclosure Standards all reinforce the need for ESG data accuracy and reporting processes. Given that the new Failure to Prevent Fraud offence under the Economic Crime and Corporate Transparency Act 2023 will come into force on 1 September 2025, it is vital that firms understand that misrepresentations or inconsistencies in ESG disclosures could, in some circumstances, constitute fraud and lead to regulatory enforcement. With ESG risks now a key area of regulatory concern, internal investigations must play a central role in verifying compliance, identifying potential greenwashing, and mitigating reputational and legal risks.