The FCA has fined interdealer broker Arian Financial (FRN 415230) £288,962.53 for failing to ensure it had effective systems and controls against financial crime.

The broker had arranged trades worth billions of pounds that the regulator said were “highly suggestive of financial crime.”

The FCA said that trading “appears to have been carried out to allow the arranging of withholding tax reclaims in Denmark and Belgium.” 

The fine is believed to be the first of 2025. Last year the FCA imposed fines of £176m on the industry, three times the sum of penalties imposed in 2023.

The FCA said Arian’s failings 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 over-the-counter equity trades of approximately £37bn and £15bn in Danish and Belgian equities on behalf of the Solo Group’s clients, receiving commission of approximately £546,949. The FCA said: “The trading was, throughout the period, circular, which is highly suggestive of financial crime.”

The regulator said in 2014 and 2015, the Solo Group made withholding tax reclaims of £899.27m and £188m to Danish and Belgian authorities, with approximately £845.90m and £42.33m respectively paid.  

Arian admitted liability but referred the FCA’s proposed fine to the Upper Tribunal. The Tribunal reduced the fine that the FCA would have imposed from £744,745 to £288,962.53.

The Tribunal agreed with the FCA’s assessment of the seriousness of the misconduct and the need to impose a penalty. However, it reduced the fine as, in the circumstances, it 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, said: “Arian 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. Arian’s fell short of what we expect. We are pleased that the Tribunal recognised the seriousness of Arian’s misconduct."  

It was the seventh case brought by the FCA in relation to cum-ex trading and withholding tax schemes. It has involved proactive engagement with EU and global law enforcement authorities, the regulator said. The FCA has imposed fines of more than £22m in relation to the trading. 

In 2023 it fined City broker ED&F Man Capital Markets a record £17.2m for “serious failings” in its oversight of cum-ex trading.

The fine was the regulator’s first of the year. Last year fines imposed by the FCA were three times higher than those imposed in 2023.