FCA fines Arian Financial for cum-ex violations
14 January 2025 UK
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The UK Financial Conduct Authority (FCA) has fined Arian Financial 拢288,962.53 for failing to ensure it had effective systems and controls against financial crime.
According to the authority, Arian鈥檚 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 拢37 billion and 拢15 billion in Danish and Belgian equities respectively on behalf of the Solo Group鈥檚 clients, receiving a commission of approximately 拢546,949.
鈥淭he trading was, throughout the period, circular, which is highly suggestive of financial crime,鈥� says the FCA. 鈥淚t appears to have been carried out to allow the arranging of withholding tax reclaims in Denmark and Belgium.鈥�
In 2014 and 2015, the Solo Group made withholding tax reclaims of 拢899.27 million and 拢188 million to Danish and Belgian authorities, with approximately 拢845.90 million and 拢42.33 million respectively paid.
Arian admitted liability but referred the FCA鈥檚 proposed fine of 拢744,745 to the Upper Tribunal, which reduced it to 拢288,962.53.
While the tribunal agreed with the FCA鈥檚 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: 鈥淎rian 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.鈥�
The FCA has imposed fines of more than 拢22 million in relation to cum-ex trading and withholding tax schemes.
According to the authority, Arian鈥檚 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 拢37 billion and 拢15 billion in Danish and Belgian equities respectively on behalf of the Solo Group鈥檚 clients, receiving a commission of approximately 拢546,949.
鈥淭he trading was, throughout the period, circular, which is highly suggestive of financial crime,鈥� says the FCA. 鈥淚t appears to have been carried out to allow the arranging of withholding tax reclaims in Denmark and Belgium.鈥�
In 2014 and 2015, the Solo Group made withholding tax reclaims of 拢899.27 million and 拢188 million to Danish and Belgian authorities, with approximately 拢845.90 million and 拢42.33 million respectively paid.
Arian admitted liability but referred the FCA鈥檚 proposed fine of 拢744,745 to the Upper Tribunal, which reduced it to 拢288,962.53.
While the tribunal agreed with the FCA鈥檚 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: 鈥淎rian 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.鈥�
The FCA has imposed fines of more than 拢22 million in relation to cum-ex trading and withholding tax schemes.
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