On 13 October 2016, the Securities and Futures Commission (SFC) announced it had issued a circular launching a cybersecurity review with a focus on assessing the cybersecurity preparedness, compliance and resilience of brokers’ internet and mobile trading systems (Review). The Review has been prompted by an increasing number of reports to the SFC from securities brokers that the security of some customers’ internet/mobile trading accounts has been compromised and unauthorised securities trading transactions were conducted through these accounts. The 13 October circular sets out the components of the Review and, in light of the latest incidents, also states that firms should, as a matter of priority, critically review and enhance their controls to combat cyberattacks.
On September 9, 2015 Sally Yates, the Deputy Attorney General, released a memorandum entitled "Individual Accountability for Corporate Wrongdoing," which was addressed to all federal prosecutors.
The so-called "Yates Memo" emphasizes that fighting corporate fraud and wrongdoing is a top priority for the Department of Justice ("DOJ"), and that the DOJ will seek accountability from the individuals that perpetrate such wrongdoing. The Yates Memo further acknowledges that achieving this goal requires the DOJ to leverage its full resources. The guidance applies to both civil and criminal matters.
Investor protection in the spotlight: Proposals to significantly enhance the Financial Dispute Resolution Scheme
The Financial Dispute Resolution Centre (FDRC), which since June 2012 has been providing alternative dispute resolution services to financial institutions and their individual customers in Hong Kong, has recently launched a consultation to significantly enhance the Financial Dispute Resolution Scheme (FDRS).
UK: FCA and PRA final rules on regulatory references: strengthening accountability in banking and insurance
The FCA and PRA have published new policy statements relating to regulatory references under the new accountability regimes for banks and insurers, which will come into force on 7 March 2017 (see FCA PS16/22 and PRA PS27/16).
Banks and insurers will have to comply with the new rules in the policy statements for all candidates being recruited to senior management functions, senior insurance management functions, FCA-controlled functions or significant harm functions from that date onwards.
The change will coincide with the implementation of the full certification regime and application of Conduct Rules to “other conduct staff”.
Please see our full briefing here for analysis of how this new regime will work in practice.
The Criminal Finances Bill 2016-17 (the "Bill") was presented to Parliament and had its first reading in the House of Commons on Thursday 13th October. In a press release on the same day, the Home Office stated that the new legislation is designed to "tackle money laundering and corruption, recover the proceeds of crime and counter terrorist financing". The Bill is divided into four parts: Part 1 adds new powers for enforcement agencies under the Proceeds of Crime Act 2002 ("PoCA"); Part 2 makes changes to existing anti-terrorism legislation; Part 3 makes provision for two new corporate offences of "failure to prevent facilitation of tax evasion"; and Part 4 includes minor and consequential amendments to PoCA.
Below, we set out a brief introduction to the Bill, highlighting certain key areas of interest. Further briefings providing more detail on some of these areas will follow in the coming weeks.
On 14 October 2016, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) again announced significant amendments to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR). This is the second round of amendments made to the Cuba sanctions regime, following earlier amendments made in March this year. The move further advances the policy goals announced by President Obama on 17 December 2014 concerning US-Cuba relations.
The Singapore Exchange (SGX) has launched two initiatives that will see member firms collaborating with SGX to act as gatekeepers with respect to market conduct issues. The first initiative is the launch of a Trade Surveillance Handbook (Handbook) to provide a set of guidelines which member firms can incorporate into their surveillance programmes. Secondly, SGX will share more data linked to possible market manipulation with member firms to assist them to enhance their monitoring of and controls around market conduct. Both initiatives signal a move towards greater industry collaboration around market conduct issues in Singapore.
In the past week, the US government took executive actions to continue its easing of the Burma and Iran sanctions regimes. On October 7, 2016, the U.S. government issued an Executive Order effecting the termination of the long-standing Burma sanctions regime. On the same day, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) updated the Frequently Asked Questions Relating to the Lifting of Certain U.S. Sanctions under the Joint Comprehensive Plan of Action (“JCPOA FAQs”), providing, among other things, guidance clarifying that U.S. dollar-denominated foreign transactions with Iran, provided no US financial institutions or other US persons are involved, will not be prohibited.
The PRA and FCA have each issued consultation papers setting out draft updated guidance in respect of the CRDIV remuneration rules.
The proposed updates from the PRA, available here, will consolidate the various existing PRA guidance documents into one, and provide further guidance on the Remuneration Part of the PRA Rulebook, which is applicable to all dual-regulated CRDIV firms.
The FCA consultation, available here, proposes amendments to the FCA guidance on the SYSC 19A Remuneration Code (applicable to CRDIV firms regulated by the FCA only) and the SYSC 19D Remuneration Code (to which dual-regulated CRDIV firms are subject in addition to the Remuneration Part of the PRA Rulebook). The FCA consultation also provides draft "FAQs" addressing certain common issues.
The consultations are open for response until 28 November 2016. To read more from our employment and incentives team, click here.
On 1 October, new binding provisions came into force in China governing the collection, extraction and review of electronic data in criminal investigations.
The Provisions contain procedures for the retrieval of electronic data inside and outside China. Foreign companies operating in China, as well as those headquartered in China with branches overseas should familiarise themselves with the Provisions and ensure compliance (both by them and by investigators). Since the Provisions strengthen and formalise the framework for seizing electronic data, we may see an uptick in dawn raids, although it is too soon to say.