Key Facts

• The clause makes changes to section 272 of the Financial Services and Markets Act 2000.
• Currently, there are four stand-alone funds, seven umbrella funds, and 27 sub-funds using section 272 to market in the UK.
• The FCA is required to examine whether the fund gives adequate protection to investors.
• Money market funds are low-risk, short-term investments used by many organisations in the UK.
• Clause 26 creates a new article 4A equivalence regime for money market funds.
• The Treasury must assess that overseas regulations have equivalent effect to those in the UK.
• The FCA will prepare reports on the law and practice of countries when considering revocation of equivalency.
• The FCA needs to register and monitor overseas firms ongoingly.
• EU will assess UK firms under a new regime from June 2021.
• Treasury will determine additional requirements after considering the FCA's views.
• Only sophisticated professional clients, not retail consumers, are serviced by cross-border firms.
• The amendment corrects Article 48A of MiFIR.
• Schedule 10 amends retained MiFIR which continues after the transition period.
• It ensures UK and EU firms operate under similar regulatory standards.
• The FCA monitors regulatory developments in overseas countries with equivalence determinations.
• Clause 28 amends the Financial Services and Markets Act 2000.
• Currently, there are approximately 59,000 FCA-regulated firms.
• Around 300 to 400 firms may no longer be carrying out regulated activities but remain on the register.
• The amendment targets approximately 300 or 400 dormant companies among 59,000 FCA-registered firms.
• The process involves the FCA giving written notice to a firm before varying or cancelling its permissions.
• There are currently 4 million to 5 million registered companies with Companies House.
• The clause increases the maximum prison sentence for insider dealing from seven to ten years.
• In 2015, the fair and effective markets review was published by the Treasury, FCA, and Bank of England with 21 recommendations for market standards improvement.
• Between 2013 and 2018, the FCA prosecuted eight cases of insider dealing, securing 12 convictions.
• Since 2009, there have been 36 successful prosecutions for market abuse offences with an average sentence of 1.7 years.
• An additional £63 million was allocated to the Home Office in last week’s spending review to boost Action Fraud.
• The economic crime levy will not cover fraud.
• The Chancellor of the Exchequer must review the effects on tax revenues of section 31 within six months after Royal Assent.
• The Treasury is required to prepare and publish a report on the effects of section 31 on money laundering within six months of the Act being passed.
• The new clauses aim to address taxes payable by owners and employees of Scottish Limited Partnerships.
• The amendment ensures continuation of existing powers under the Sanctions and Anti-Money Laundering Act after the EU exit transition period.
• Changes made by the Money Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020 will increase the number of registered trusts from 120,000 to an estimated 3 to 6 million.
• New clause 31 aims to ensure regulations can be made in respect of trustees with links to the UK.
• The tax gap for 2017-18 was £35 billion, representing 5.6% of total tax liabilities.
• Scottish limited partnerships (SLPs) are used for criminal activities like money laundering and arms running.
• Companies House collects information but does not verify its accuracy, leading to potential misuse of SLPs.
• Huq has been advocating against the abuse of SLPs for five and a half years.
• The scale of money laundering could run into hundreds of billions of pounds.
• A Security Minister estimated £90 billion as a conservative estimate for money laundering.
• Companies House faces criticism for its role in regulating beneficial ownership, with no fines or criminal proceedings related to this issue until recently.
• In September, BEIS announced changes to Companies House structure including compulsory identity verification and powers to query false information.
• The proposal for mandatory ID verification applies only to companies registering directly with Companies House, not those using third-party agents (60%).
• 336,000 companies have not disclosed their beneficial owner according to Global Witness estimates.
• The Treasury Committee’s 2019 report highlighted a loss of between tens of billions to £100 billion due to market abuse.
• FinCEN papers revealed close to $2 trillion in transactions potentially involved in money laundering from 2000 to 2017.
• Over 80% of suspicious activity reports are submitted by banks, with very few from other entities.
• New clause 30 would require the Treasury to report on tax impacts of provisions regarding overseas trusts and Scottish limited partnerships.
• Government introduced changes through amendments to money laundering regulations expanding non-UK trust registration requirements.
• Registration of Scottish limited partnerships fell from 4,932 in 2016-17 to 657 in 2019-20 after transparency reforms.
• Government plans a register for beneficial owners of overseas entities buying UK land as part of the economic crime plan.
• New clauses 30 and 35 will not be decided until Thursday.
• Clause 31 has been ordered to stand part of the Bill.