Société Générale fined £1.575 million for failures in transaction reporting

The Financial Services Authority (FSA) has fined the London branch of Société Générale (SocGen) £1,575,000 for failing to provide accurate transaction reports to the FSA. The fine reflects the seriousness of SocGen’s failure to submit accurate reports for approximately 80% of its reportable transactions, across all of its asset classes, for a period of over two years.

Firms are required to ensure they submit data for reportable transactions by close of business the day after a trade is executed. The FSA uses this data to detect and investigate suspected market abuse including insider trading and market manipulation.

SocGen also breached FSA rules by failing to retain and have available all relevant transaction reporting data. Firms must keep all data related to financial transactions and make it available to the FSA for at least five years.

Between November 2007 and February 2010, SocGen either failed to report, or inaccurately reported, 18.8 million of its 23.5 million reportable transactions. These breaches occurred despite the FSA sending repeated reminders to firms of their obligations to provide accurate data and of the importance of compliance with the FSA rules on transaction reporting.

Margaret Cole, director of enforcement and financial crime at the FSA, said:

"This is the sixth case in the last year where we have taken action against a firm for failures to make accurate transaction reports. We will continue to monitor the quality of firm reporting and we are committed to taking action where necessary to ensure firms comply with their reporting obligations.

"SocGen failed to accurately report a very high proportion of its transactions for a significant length of time. This failure is a serious breach of our rules as it can have a damaging impact on our ability to detect and investigate suspected market abuse.

"Firms and their management must ensure they submit quality transaction reporting data and we encourage all firms to review the integrity of this data on a regular basis."

The firm has taken a number of steps to address the concerns raised including commissioning a formal review of its transaction reporting process and committing resources to improve its processes and resolve the errors.

Zurich Insurance fined £2.275 million by FSA over loss of policy holders' personal details

The Financial Services Authority (FSA) has fined the UK branch of Zurich Insurance Plc (Zurich UK) £2,275,000 for failing to have adequate systems and controls in place to prevent the loss of customers’ confidential information. The fine is the highest levied to date on a single firm for data security failings.

The failings came to light following the loss of 46,000 customers’ personal details, including identity details, and in some cases bank account and credit card information, details about insured assets and security arrangements. The loss could have led to serious financial detriment for customers and even exposed them to the risk of burglary. Zurich’s failings were in breach of Principle of Business 3 (management and control) and the FSA’s System and Controls rules.

Zurich UK has seen no evidence to suggest that the personal data was compromised or misused.

Zurich UK outsourced the processing of some of its general insurance customer data to Zurich Insurance Company South Africa Limited (Zurich SA). In August 2008, Zurich SA lost an unencrypted back-up tape during a routine transfer to a data storage centre. As there were no proper reporting lines in place Zurich UK did not learn of the incident until a year later.

Zurich UK failed to take reasonable care to ensure it had effective systems and controls to manage the risks relating to the security of customer data resulting from the outsourcing arrangement.

The firm also failed to ensure that it had effective systems and controls to prevent the lost data being used for financial crime.

Margaret Cole, the FSA’s director of enforcement and financial crime, commented:

"Zurich UK let its customers down badly. It failed to oversee the outsourcing arrangement effectively and did not have full control over the data being processed by Zurich SA. To make matters worse, Zurich UK was oblivious to the data loss incident until a year later.

"Firms across the financial sector would do well to look at the details of this case and learn from the mistakes that Zurich UK made."

The FSA has previously fined HSBC, Nationwide and Norwich Union for data loss.

An end date for SEPA?

A successful SEPA implementation is seen by many as the key to more efficient European retail payment systems. SEPA credit transfers and payment cards have been available since January 2008, and SEPA direct debits since November 2009.

However, migration to the new payment instruments continues to be slower than is actually needed to contain the costs to payment-service providers, realize the promised economies of scale and reap all the expected benefits.

Setting a clear deadline for the migration of legacy products to SEPA products would enable users and providers to draw up suitable plans and would put new life into the project.

The European Commission has conducted a public consultation on the possible end-date(s) for phasing out legacy domestic payment schemes corresponding to SEPA standards. The findings have confirmed that the various stakeholders would prefer to see the end-date (and possibly two separate end-dates for SEPA credit transfers and SEPA direct debits) established by means of an EU Regulation.

In June 2010 the Commission launched a new public consultation on the "Working paper on SEPA migration end-date" outlining the main features of such Regulation. This document and the answers received will form the basis of the EU Regulation on the end-date(s).

The documents are available from the following European Commission website HERE.

Remittances to Nepal under threat

As if the global recession was not enough, migrant workers, Nepal’s best ‘export’ that contributes nearly 20 percent of the country’s GDP, are facing a series of recent worries. The month started with 153 Nepali workers in Macau losing their jobs. Then there was news of 108 workers being duped by manpower agencies stranded in Libya.

More bad news followed with Afghanistan President Hamid Karzai banning security agencies. It would lead to nearly 15,000-20,000 Nepalis working as security guards losing jobs.

Last month Nepal lifted a six-year ban on workers going to Iraq. While it came as relief to those who entered the country legally, the fate of nearly 100,000 illegal Nepalis in Iraq still hangs in balance. And Nepal has failed to persuade Israel to lift a 2009 ban on its workers.

These are worrying signals for the country that is largely dependent on remittances. At present Nepal receives around US $ 3 billion annually from the nearly three million migrant workers abroad (except India).

“The aftermath of the global financial crisis and the ensuing economic crisis is definitely a difficult time for Nepali migrants,” says columnist Chandan Sapkota.

The decline in demand of Nepali workers will directly affect remittances. It will also affect household purchasing power and sectors like real estate and imports where remittances money is flowing into.

Narrowing down of options won’t mean an increase in semi-skilled/unskilled Nepalis moving to India. But since the job market in Nepal is squeezing, skilled workers could turn to India, says Sapkota. India is home to nearly 10-12 million Nepali workers at present.

“The government has to wake up; seriously and with a detailed plan,” Sapkota says.

But with political stability eluding Nepal, when some measures will be put into place is anyone’s guess.

Barclays systems crash leaves shoppers stranded

Thousands of Barclays customers in Britain were unable to get into their bank accounts or withdraw money from cash machines last Saturday after a nationwide system crash. The problems, which began around noon, hit telephone and online banking services and caused frustration at retail outlets as embarrassed shoppers had to abandon purchases at the tills.

Barclays' telephone centers were inundated with calls from customers, many angry at the lack of information from the bank. A spokeswoman said: "We apologise to customers for any inconvenience."

The latest malfunctions follow disruption in June last year, when five million customers were unable to withdraw cash from the bank’s ATMs.

Cheque deposits on your mobile phone

Mobile banking is moving fast – especially in the land of the cheque – the United States.

Chase has introduced a new mobile banking service – depositing your old fashioned paper cheque using your mobile phone. This has been achieved by using an application for Apples iPhone that allows bank customers to deposit cheques with the camera-enabled smartphone.

This means no more trips to a local bank branch or ATM or having the hassle with deposit slips. Customers of Chase simply use their phones' cameras to snap pictures of the front and back of the endorsed cheques and electronically send them to the bank.

The technology, called "remote deposit capture," is gaining popularity among many banks and credit unions.

More common than mobile applications are programs that allow customers to deposit cheques with their home computer scanners. Several local financial institutions have such programs or plan to start them soon.

Ghanaian postal officer charged with remittance theft

A female Assistant Postal Officer of the Ghana Post at Suame in charge of the Western Union Money Transfer Service, accused of embezzling GH¢278,555 belonging to the Agricultural Development Bank (ADB), has appeared before a circuit court in Kumasi, charged with stealing.

Louisa Osei-Agyemang is said to have connived with some customers of the Western Union Money Transfer service of the ADB to inflate remittances and pocketed the difference.

She pleaded not guilty to the charge and the court, presided over by Mr. R.M. Kogyapwah, admitted her to a GH¢270,000 bail with two sureties to be justified. She is to reappear on September 22.

Corporal Godwin Ahianyo of the Ashanti Regional Police Public Relations Unit said Ms Osei-Agyemang’s activities came to light during an audit when it was detected that the total money advanced to the office for clearance did not tally with the amount of money expected to be released to customers.

A further examination of the books revealed that between January 2009 and early August this year, some of the customers were paid remittances far in excess of what they were due.

Cpl Ahianyo said a report was made to the Regional Accountant of the Ghana Post and Ms Osei-Agyemang was invited to the regional office to explain the unbalanced amount. The regional accountant referred the case to the police.

Mr Ahianyo said Ms osei-Agyeman was initially granted a police enquiry bail, but after preliminary investigations, she was re-arrested last Wednesday and appeared before the court.