Key Facts

• New Clause 8 aims to update the Proceeds of Crime Act 2002.
• FinTech customers should be treated equally with traditional bank customers regarding money laundering provisions.
• The number of DAML submissions grew significantly from financial technology companies, increasing by 247.36% from 9,343 in a previous year to 32,454.
• Recent article in The Times highlights customer account lockouts due to excessive DAML reports.
• Ian Mynot of UK Financial Intelligence Unit stated unnecessary DAMLs are hindering criminal investigations.
• FinTechs spend significant time and money on DAML submissions instead of product development.
• Subsection (4) of the new clause would extend DAML eligibility to electronic money institutions.
• The Proceeds of Crime Act includes provisions for account-freezing orders in standard bank accounts but not FinTech accounts.
• UK’s FinTech sector has 600 propositions, employs 76,500 people, and received £4.1 billion in venture capital last year.
• Over 60,000 suspicious activity reports (SARs) were received by the National Crime Agency (NCA) in 2020, with electronic money institutions contributing four-fifths of the increase.
• The UK denied £172 million to suspected criminals through DAML SARs in 2020, up 31% from £132 million in the previous year.
• New clause 9 would create greater transparency around the taxation of multinational companies.
• Schedule 19 of the Finance Act 2016 introduced a requirement for UK-headed multinational enterprises to publish tax strategies, which can include country-by-country reports.
• The Government currently have the power but have not fully used it to require public country-by-country reporting.
• New Clause 10 would require the Treasury to report to Parliament when the FCA recommends removing an organisation from Schedule 1 of the MLR.
• The statement must be made within four weeks of the recommendation being made.
• The statement should include the Government’s response, impact on the sector, and a timescale for removal if applicable.
• There are 22 different professional bodies responsible for monitoring compliance with anti-money laundering measures in the UK.
• The Oversight of Professional Body Anti-Money Laundering and Counter Terrorist Financing Supervision Regulations 2017 established OPBAS within the FCA to improve standards among professional supervisory bodies.
• A Treasury Committee report from last year highlighted concerns about the lack of preparation if a body's supervisory responsibilities were stripped.
• New Clause 17 would bring non-interest-bearing elements of buy-now-pay-later lending services under FCA regulation.
• New Clause 22 requires the FCA to consider consumer interests when assessing business models, focusing on revenue from re-lending and total cost of credit exceeding 100% of borrowed amount.
• The clauses aim to prevent excessive relending activities that could harm consumers.
• The Financial Conduct Authority (FCA) has failed to protect constituents from companies going into administration.
• Capping costs has been an effective form of regulation, benefiting both industry and consumer.
• Rent-to-own market costs have decreased by a fifth due to FCA's cap implementation.
• Over 10,000 people are still owed money by Wonga but may never receive it due to company administration on the FCA’s watch.
• Guarantor loans charge up to 49% interest rates and have seen an increase in complaints during the pandemic.
• The Young Women’s Trust has suggested that 1.5 million young women have lost income during the pandemic.
• Some 20% of those young people say they have missed a payment in the last year because their income has gone.
• Klarna was boasting that it had signed a partnership with a new merchant every eight minutes by the end of 2019, and 6 million people were using its product weekly.
• The Money and Mental Health Policy Institute found that more than 3 million people with mental health problems have struggled to control online spending during the pandemic.
• The buy now, pay later industry is expanding rapidly.
• New clauses would regulate BNPL under the Financial Conduct Authority (FCA).
• Re-lending practices lead to significant debt increases and financial distress for customers.
• The Government gave the FCA power to cap regulated credit if necessary.
• The FCA is conducting a review into unsecured credit market changes due to present concerns about buy now, pay later products.
• Conclusions from the FCA review are expected early next year.
• New Clause 17 would regulate buy-now-pay-later firms and other lending services with non interest-bearing elements.
• New Clause 20 aims to extend the Treasury's power to require investigations to relevant select committees.
• The clauses seek to address concerns about consumer debt and financial regulation.
• The Financial Services Act 2012 enables the Treasury to require regulators to conduct investigations under section 77.
• The Treasury Committee scrutinized the investigation into the Co-operative Bank in 2018 and made recommendations accepted by the PRA.
• There is a mechanism for Select Committees to launch their own investigations.
• New clause 24 introduces an offence of failing to prevent economic crime.
• The proposed amendment aims to create corporate liability, making it similar to existing liabilities for bribery or tax evasion.
• The directive requires EU member states to have corporate criminal liability for money laundering and lack of supervision by leading positions in companies.
• The proposed offence would apply only to FCA-regulated persons.
• The Government introduced a senior managers regime following the financial crisis.
• Financial services firms must adhere to strengthened anti-money laundering requirements under Money Laundering Regulations 2017 and subsequent amendments.
• Recent fines related to firms’ anti-money laundering weaknesses include £102 million for Standard Chartered in April 2019 and £96.6 million for Goldman Sachs in October 2020.
• The Chancellor of the Exchequer must review the effect of the use of powers in Scotland within six months of the Act receiving Royal Assent.
• The review must consider the effects on business investment, employment, productivity, inflation, financial stability, and liquidity.
• The review must estimate the effects under different reserve limit scenarios: £100 million, £250 million, £500 million, and £1,000 million.
• The statement is about new clause 32 which requires statutory financial regulation scrutiny committees.
• The committees would be established by regulations made by the Treasury.
• Committees must have at least as much power as the relevant EU committees.
• New clause 33 would require the Chancellor to assess the Act's impact on UK meeting Paris climate change commitments within six months of Royal Assent.
• New clause 34 mirrors new clause 33 but focuses on the UN Sustainable Development Goals.
• The Government supports the aims but argues that existing mechanisms ensure accountability towards these international obligations.
• The Co-operative and Community Benefit Societies Act 2014 restricts registered societies with withdrawable share capital from undertaking banking activities.
• The clause aims to amend sections of this Act, including sections 4, 67, 68, and 69.
• Existing prudential regulation in the Bill covers co-operative banks' capital adequacies.
• The amendment aims to remove restrictions preventing co-operative societies from holding withdrawable share capital for banking activities.
• Treasury officials have had conversations with individuals seeking to set up regional mutual banks but their names cannot be mentioned due to regulatory processes.
• Ensuring appropriate capital levels is critical for financial stability and consumer protection.
• The speaker acknowledges the work done by MPs, Clerks, Treasury officials, researchers, and evidence contributors.
• Letters are expected from the Minister regarding points of detail raised during the Committee sessions.