FCA fines Arian Financial for cum-ex violations
14 January 2025 UK
Image: Taufik/stock.adobe.com
The UK Financial Conduct Authority (FCA) has fined Arian Financial £288,962.53 for failing to ensure it had effective systems and controls against financial crime.
According to the authority, Arian’s failure put it at risk of being used to support fraudulent trading and money laundering on behalf of clients of the Solo Group.
Arian executed purported OTC equity trades of around £37 billion and £15 billion in Danish and Belgian equities respectively on behalf of the Solo Group’s clients, receiving a commission of approximately £546,949.
“The trading was, throughout the period, circular, which is highly suggestive of financial crime,” says the FCA. “It appears to have been carried out to allow the arranging of withholding tax reclaims in Denmark and Belgium.”
In 2014 and 2015, the Solo Group made withholding tax reclaims of £899.27 million and £188 million to Danish and Belgian authorities, with approximately £845.90 million and £42.33 million respectively paid.
Arian admitted liability but referred the FCA’s proposed fine of £744,745 to the Upper Tribunal, which reduced it to £288,962.53.
While the tribunal agreed with the FCA’s assessment, it also considered the financial benefit Arian received should be net of certain fees Arian paid to Solo and the broker in respect of the trades.
Steve Smart, joint executive director of enforcement and market oversight at the FCA, says: “Arian failed to identify red flags which ought to have been obvious. The controls the firms we regulate have in place are an important line of defence against our financial system being abused for criminal ends.”
The FCA has imposed fines of more than £22 million in relation to cum-ex trading and withholding tax schemes.
According to the authority, Arian’s failure put it at risk of being used to support fraudulent trading and money laundering on behalf of clients of the Solo Group.
Arian executed purported OTC equity trades of around £37 billion and £15 billion in Danish and Belgian equities respectively on behalf of the Solo Group’s clients, receiving a commission of approximately £546,949.
“The trading was, throughout the period, circular, which is highly suggestive of financial crime,” says the FCA. “It appears to have been carried out to allow the arranging of withholding tax reclaims in Denmark and Belgium.”
In 2014 and 2015, the Solo Group made withholding tax reclaims of £899.27 million and £188 million to Danish and Belgian authorities, with approximately £845.90 million and £42.33 million respectively paid.
Arian admitted liability but referred the FCA’s proposed fine of £744,745 to the Upper Tribunal, which reduced it to £288,962.53.
While the tribunal agreed with the FCA’s assessment, it also considered the financial benefit Arian received should be net of certain fees Arian paid to Solo and the broker in respect of the trades.
Steve Smart, joint executive director of enforcement and market oversight at the FCA, says: “Arian failed to identify red flags which ought to have been obvious. The controls the firms we regulate have in place are an important line of defence against our financial system being abused for criminal ends.”
The FCA has imposed fines of more than £22 million in relation to cum-ex trading and withholding tax schemes.
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