Ridhima Bhasin ACA

Ok, so the UK Home Office and HM Treasury published the UK's 2025 National Risk Assessment (NRA) for Money Laundering and Terrorist Financing yesterday. There are a few key points that our clients should be aware of, particularly those operating in the electronic money and payments sector. 📜 Financial Crime risk assessments: the Financial Conduct Authority expects firms it regulates or supervises to pay attention to the NRA when creating and maintaining business-wide and customer-specific financial crime risk assessments. Refer to the FCA's Financial Crime Guide (also recently updated) at paragraph 3.2.3. Accordingly, if you're an MLRO or on the board of a regulated or supervised firm, this might be a good time to do this / check that this has been done. 💷 Typologies: the NRA includes an updated assessment of typologies that have been sighted in each sector. Many are old, but there are a few new entrants. Ensure that your risk assessments account for these. Furthermore, determine whether your monitoring systems (manual or technological) sufficiently consider these typologies and whether calibrations remain adequate. 🎯 Prepare for possible regulatory interaction, especially if your firm is in the payments or electronic money space: the NRA reports a 231% increase in money laundering-related FCA supervisory activity involving these firms between 2020-24. Could your firm be next? Are you confident that your firm could demonstrate a robust control environment if inspected by the regulator? 🏦 The intersection between payment/electronic money services and cryptoasset activities is a key area of focus for UK authorities. The issuance of virtual IBANs is also attracting considerable scrutiny. If your firm is involved in these activities, it is likely to be very high on the radar for interaction. If you are seeking to launch a new firm or business line(s) in these areas, expect this to receive a lot of attention during the application process. These are just a few bits that I believe to be significant. If you'd like to read the full report, see here 👇 https://lnkd.in/eh8V4dfw #compliance #aml #amlcompliance #financialservices #financialmarkets #cryptoassets #payments

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The Promoter Reclassification Riddle - Regulation 31A In a recent informal guidance, SEBI clarified that reclassification of promoters to the public category is permissible, provided the conditions under Regulation 31A of LODR Regulations are satisfied. One of the key conditions is that the promoters seeking reclassification, along with their "related persons" must not hold more than 10% of the total voting rights. While the threshold appears numerical, it gives rise to several complexities. A few nuances around reclassification include: 1. Individuals with no role in management or control: Regulation 31A(3)(b)(i), when read with the definition of "related persons", captures immediate relatives irrespective of any actual involvement in the company. For example, a married daughter with no board position, may still be treated as a “related person”. Consequently, even where a promoter is independently seeking reclassification, their combined shareholding counts toward the 10% cap, making reclassification ineligible. 2. Classification based on status, not substance: Recent SEBI FAQs provides that even if a person or entity does not hold any shares, such person is required to be classified as promoter group if related to the promoters. Therefore, once they are included as a part of promoter/ promoter group, their reclassification requires the same regulatory process, which would be difficult to adhere to “related person” condition. 3. Gifting of shares to employees by promoters: In the case of Prudent Corporate Advisory, shares were gifted by the promoters to employees. Due to Regulation 31A(6), these employees would, by default, be classified as promoter group. If the employee base is large enough, it would lead to distortion of promoter holding/ disclosure, and thereby triggering the need for reclassification. Therefore, we had advised on a formal exemption from SEBI had to be sought to ensure that employees are correctly treated as public shareholders, and SEBI had accorded the said exemption. 4. Lack of clarity for trusts settled for non-immediate relatives: Where shares are settled in a trust for the benefit of grandchildren or distant relatives (tax issues aside), ambiguity arises on whether such contribution qualifies for automatic promoter group tagging under Regulation 31A(6). 5. Public to Promoter - reclassification triggers open offer: A public shareholder seeking reclassification as a promoter is required to make an open offer under the Takeover Code, regardless of actual control or acquisition. While Regulation 31A is a well-intentioned framework, there is merit in considering a case-by-case approach or a relaxation mechanism, which was so previously, and is absent in the current avatar of Regulation 31A. Katalyst Advisors Ketan Dalal Deep Chandan #SecuritiesLaws

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📌 In Hove today, running a workshop on Mastering Risk and Control Self-Assessments. Reflections on the train (and luckily, a lovely journey avoiding London tube strike) 👉 RCSA is a key forward-looking component of the operational risk framework, and one of the most interactive and engaging tools available to risk practitioners.   👉 It is a known fact that it attracts a fair share of criticism, and plenty of industry surveys signal the need for a thorough re-examination of this core tool. 👉 While there is no simple recipe, more positive outcomes can be achieved by replacing templates with meaningful facilitated discussions, reducing the number of risks to focus on material threats, and acting to mitigate these threats. Great conversations and debates with risk professionals! Let's collectively elevate the brand of this fantastic risk management tool. #risk #oprisk #operationalrisk #riskmanagement #operationalriskmanagement

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🚨 New Economic Crime Priorities for the UK Regulated Sector Yesterday the NCA and FCA jointly published nine economic crime priorities for the UK’s regulated sector - intended to be a step toward sharper risk alignment across financial services. The priority areas include: 1️⃣ Economic crime and sanctions evasion by professional enablers 2️⃣ Overseas PEPs 3️⃣ A resilient cryptoasset ecosystem 4️⃣ Movement of criminal cash 5️⃣ Money laundering via OCGs linked to 'priority jurisdictions' 6️⃣ Fraud by international offenders 7️⃣ Use of money mules 8️⃣ Fraud originating from telcos and online platforms 9️⃣ Terrorist financing 🌍 The ‘priority jurisdictions’ - including Albania, China, Ghana, Nigeria, India, Russia, UAE and southeast Asia - mirror the countries highlighted in the recently published National Risk Assessment, reinforcing their heightened risk status. 📌 This publication can provide practical, actionable guidance for regulated firms, particularly when reviewing product and customer risk assessments, geographic risk factors, and controls calibration. Link to the whole document in the comments below 👇

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