In its paper, Banks’ management of high money-laundering risk situations, the regulator says that it found serious weaknesses in regards to a number of firms including its review of anti-money laundering risk-management.
The FSA says that a number of banks appeared unwilling to turn away, or exit, very profitable business relationships when there appeared to be an unacceptable risk of handling the proceeds of crime.
It says: “Around a third of banks, including the private banking arms of some major banking groups, appeared willing to accept very high risk levels of money-laundering risk if the immediate reputational and regulatory risk was acceptable.”
Other concerns included some banks’ anti-money laundering risk-assessment frameworks not being robust enough; some banks failing to put significant safeguards in place to mitigate relationship managers having a conflict of interest and a third of banks’ customer due-diligence was found to be inadequate.
It also found that some banks were unable to give them an overview of their high risk and politically exposed person (PEP) customers easily. The FSA says nearly half the banks in its sample failed to review high risk or PEP relationships regularly.
Robert Palmer of campaigners Global Witness said the FSA's warts-and-all report was commendably candid — far more so than comparable reports elsewhere in the world — but also raised questions as to the regulator's effectiveness. "If I was the FSA I would be embarrassed that the banks they are supposed to regulate have such a disregard for regulations that have the force of law," he said.
Defending the FSA's position, Tracey McDermott, acting head of financial crime, said: "It is not a pretty picture. Obviously, we would have preferred it if there was better compliance ... The banks are just not taking the rules seriously enough."
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Data from the Office for National Statistics (ONC) published yesterday showed that public sector net borrowing fell last month to £15.156 bn from £16.463 bn in May last year, helped by higher indirect taxes such as VAT.
However, doubts remain over whether Chancellor George Osborne can meet his reduction goal this year, amid weaker-than-forecast growth and resistance to the cuts from the unions. In the first two months of 2011, the deficit widened by £1.5 bn from a year earlier to 27.4 billion pounds.
"That still leaves progress during the full year so far as disappointing," said Investec economist Philip Shaw. It's early days, but we would be hoping to see more positive effects of the spending cuts coming through in the figures."
The Government is one year into a five-year plan to largely eliminate the country's budget deficit. However, the opposition has accused the government of trying to reduce the deficit too quickly, thereby hurting the country's fragile economic recovery.
However, Prime Minister David Cameron’s response to Labour’s calls to slow the pace cuts was that their “plan B would stand for bankruptcy.”
But Mr Cameron’s insistence on keeping to the Government’s plan, which will squeeze the public sector, is setting him on a collision course with the unions. Around 750,000 public-sector workers are set to take part in a national strike on June 30 to protest against government plans to curb their pension rights.
The independent Office for Budget Responsibility forecasts that public borrowing, excluding financial sector interventions, will total £122 bn during the current 2011/12 tax year, more than £20 bn lower than the £143.189 bn borrowed in the previous year. This is equivalent to a budget deficit of 9.58 per cent of GDP, down from 11.13 per cent in 2009/10.
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The controversial decision to increase the state pension age to 66 and four months has been agreed on by Government ministers. However, due to a backlash of criticism the move has been postponed until 2024, instead of 2020, as originally planned.
In exchange for a delay to the changes being introduced, a higher pension age was finally agreed on. It is hoped that the delay will soften the blow of a sharp rise to the retirement age, allowing women in their 50s time to make plans for alternative retirement savings.
With retirement put back by as much as two years, it was estimated that for over 330,000 women who were born between December 1953 and October 1954, the increase to the retirement age would have had the biggest impact on their retirement plans as they would have faced the steepest rise in their pension age.
There has been wide acceptance that changes must be made to the state pension age due to the fact that life expectancy is rising and the burden it will have on the tax payer. However, many eyebrows have been raised at the rate at which it is rising.
Ros Altmann, the director general of Saga, said: “We have been inundated with letters and emails from women affected by these unfair changes and we believe that the Government's timetable for raising the state pension age should be adjusted.
“Some even said it feels as if the Government has gone into their bank account and robbed them of £10,000.”
Conservative Work and Pensions Secretary Iain Duncan Smith and Liberal Democrat Pensions Minister Steve Webb are understood to be “sympathetic” to the arguments.
A report published today by the charity Age UK says a worrying number of women are confused by the reforms. When asked when they will get their state pension, one in five women in their early fifties said the answer is 60.
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According to a survey of IoD members, the proposed auto-enrolment pensions starting next year will cost employers huge amounts, with 57 per cent of them warning that the administrative burden will be high or very high.
The auto-enrolment scheme will start in October 2012 and will mean that all employers will be required by law to enroll their employees into a pension and make contributions to it on their behalf.
The employer’s contribution will be a minimum of 3 per cent of the employee’s salary and workers will have the chance to opt out if they wish. The move is aimed at cutting the ballooning private sector pensions deficit.
The survey also revealed that the burden is likely to fall hardest on small firms. Currently 95 per cent of firms that do not have any pension arrangements for employees into which the employer contributes are SMEs.
Commenting, Miles Templeman, Director-General of the IoD, said: “The Government shouldn’t underestimate the cost burden that auto-enrolment is going to place on small firms. Bigger businesses will mostly have pension arrangements for employees set up. Of course we need to improve retirement provision in the UK, but yet again it’s the small entrepreneur who is hit.
“Since the Government isn’t prepared to change course on what’s essentially a major piece of employment regulation, it needs to compensate for this burden with an equally significant deregulation elsewhere. Phasing in auto-enrolment buys us some time, but the private sector can’t be expected to bounce back and create new jobs in the longer run if the Government keeps dropping new cost burdens on firms.”
The survey found that a third of companies would freeze salaries to pay for the scheme, while 9 per cent would cut wages. Some 34 per cent said they would have to pay for contributions from profits, heaping financial pressure on already cash-strapped businesses.
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Small businesses that use online trading platforms, such as Ebay and Gumtree, are being targeted by the HM Revenue & Customs (HMRC).
The tax affairs of businesses that use websites to trade online will be under the scrutiny of the taxman, who will be monitoring computer systems with a hope that they will recognise the businesses that are not paying “the right tax”.
The latest drive against tax evaders follows last year’s similar campaign against the medical profession, which was hailed as a success by the HMRC, raising £10 million from unpaid taxes and fines.
Dance and fitness coaches, private tutors, and cash-in-hand traders, who have the ability to hide second incomes, will also be targeted as part of the HMRC’s aim to recover £7 billion, which is lost to the Treasury each year.
The HMRC will also be on the lookout for tradesmen who are willing to work without charging VAT.
It is hoped that the campaigns will encourage dishonest traders to voluntarily declare their unpaid taxes. If businesses and traders are caught, the campaigns will see them being offered a partial amnesty with penalties capped at between 10 per cent and 20 per cent of their outstanding tax from the last five years.
However, those who fail to act will face fines of between 35 per cent and 100 per cent of the tax evaded.
Mike Wells from HMRC said: “We will use the information we gather to pursue people who choose not to use the opportunities we provide for them to put their affairs in order on the best possible terms. It will be more expensive if we come and find people, so I urge them to come forward and disclose voluntarily.”
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