The TJM Partnership Limited has been handed a £2m fine by the FCA for failing to ensure it had effective controls in place to reduce the risk of financial crime and money laundering in its business.

This is the third case brought by the FCA in relation to cum-ex trading and the largest fine so far, which the regulator said reflects the “multiple examples of serious misconduct” over a lengthy period.

TJM, which is in liquidation, was found to not have adequate systems to identify and mitigate the risk of being used to facilitate fraudulent trading and money laundering in relation to trading on behalf of clients of the Solo Group between January 2014 and November 2015. It also failed to adequately apply its anti-money laundering policies and did not properly monitor the risk of financial crime.

Trading executed by TJM on behalf of the Solo Group’s clients throughout the period was characterised by a circular pattern of purported trades – characteristics which the FCA stated are “highly suggestive” of financial crime. The trading appears to have been carried out to allow the arranging of withholding tax reclaims in Denmark and Belgium.

TJM executed trading to the value of approximately £59bn in Danish equities and £20bn in Belgian equities, and received commission of £1.4m – a significant proportion of the firm’s revenue in the period.

The firm was also found to have failed to identify money laundering risks in two other instances related to Solo Group business. This involved transactions with no apparent economic purpose except to transfer substantial windfall profits of €4.3m amongst its clients, the regulator stated.

FCA executive director of enforcement and market oversight, Mark Steward, said: “TJM allowed itself to become involved in a self-evidently suspicious scheme of circular transactions that looked like shams. TJM demonstrated a complete lack of care and diligence in participating in these transactions of dubious purpose.”

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