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FCA Sees Suspicious Transactions Decline for 2019

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The UK financial watchdog has seen the number of suspicious transactions and order reports (STORs) go down for the first time since 2016, according to its latest STORs report for December 2019. The regulator suggests that more robust steps taken by firms to tackle financial crime risks could be part of the reason for the decline, along with its recent supervisory crackdown on compliance.

Chapter 8 of the FCA’s Financial Crime Guide, published in December 2018, highlighted firms’ obligations to counter the risk of being used to further financial crime, including the criminal offences of insider dealing and market manipulation. The steps taken by some firms, since then, include reviewing the suitability of clients whose trading may otherwise have been subject of a STOR and restricting their access to financial markets where appropriate.

“We believe these restrictions have resulted in less suspicious activity being facilitated by these firms, and consequently a reduction in STORs,” says the regulator.

The 2019 figures do however suggest that the number of commodity and fixed income STORs continue to rise. This reflects steps taken by firms to improve their detection capabilities, and the FCA has encouraged firms to continue developing their surveillance capabilities in this area.

“We have also seen an increase in the number of market observations received,” notes the FCA. “Market observations provide us with valuable intelligence and we encourage their submission where a STOR is not appropriate.”

Market Observations were launched in 2019, designed to provide a channel for firms to submit information about market activity they have observed which is not necessarily appropriate as a STOR.

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