Risk Update

Financial Risk — Law Firm Insider Trading Warning, AML News & Panama Papers Lawyers

200 law firms suspended in UAE for failing to comply with anti-money laundering procedures” —

  • “A total of 200 law firms in the UAE that had failed to comply with anti-money laundering procedures have been suspended from practicing for one month.”
  • “The Ministry of Justice has also called upon law firms to take necessary measures against money laundering and terrorist financing, Wam reported. The necessary legal measures are outlined in Federal Decree 20 of 2018 with regard to money laundering, executive regulations, and relevant ministerial decisions. The decree is part of the UAE’s efforts to address the risks associated with financial crimes.”
  • “The Ministry emphasised the importance of law firms’ role in combating money laundering, as well as the need for lawyers to assume their role in fighting such crimes. Lawyers must also handle clients carefully, report suspicious transactions, and maintaining proper records, the Ministry urged. It added that it had taken recent action against non-compliant lawyers, in addition to the law firm suspensions.”

FCA: Working from Home Heightens Insider Trading Risks” —

  • “In an October 12 speech, the Director of Market Oversight for the Financial Conduct Authority (FCA) emphasized the need to adapt insider trading controls to account for changes in working conditions due to COVID-19 restrictions.”
  • “The Director’s speech started by discussing that global economic conditions have heightened the need for companies to raise capital, and that the UK has seen a significant portion of this activity, with the FCA citing the fact that ‘the UK saw a greater volume of follow-on equity issuance than the next 7 major European bourses combined.'”
  • “While this situation presents novel issues for firms and professionals, the FCA emphasized the need for firms to adapt and implement effective insider trading controls. The Director emphasized, ‘[a]t a time where capital raising activity is vital to fuel much needed economic activity, we must be crystal clear that behaviours that risk disrupting that activity will not be tolerated.'”
  • “In addition to capital raising, the rise in mergers and acquisitions has presented new challenges. The FCA warned that firms must ensure they have appropriate controls in place to protect against inappropriate activity with respect to mergers and acquisitions.”
  • “The FCA highlighted concerns that home work arrangements could present difficulties in ensuring insiders are appropriately keeping information from partners or flatmates that now share workspaces. While these concerns have always existed, the extent of the current at-home worksite may increase those risks: ‘It is absolutely the case that this risk has always existed, but when the separation between work and home life is perhaps harder for some people to navigate, it may be all the more important and acute.’ This line may be harder to draw in a COVID-19 world.”

Germany seeks arrest of Panama Papers lawyers” —

  • “Germany has issued arrest warrants for the founders of Panamanian law firm Mossack Fonseca more than four years after the publication of Panama Papers, an investigation led by the International Consortium of Investigative Journalists.”
  • “The spokesperson said that the warrants related to probes that began in 2014 when authorities obtained a subset of data from Mossack Fonseca. The data provided ‘evidence of criminal offences in over 600 cases,’ the spokesperson said.”
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