Merrill Lynch fine “increases likelihood” of sanctions on banks involved in ‘hidden debts’ – NGO

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Merrill Lynch fine “increases likelihood” of sanctions on banks involved in ‘hidden debts’ – NGO

11:54 CAT | 26 Oct 2017

The British organisation Debt Jubilee Campaign (DJC) yesterday told Lusa that the UK authorities’ fine on Merrill Lynch “increases the likelihood” that the banks involved in the secret loans to Mozambique would be punished.

“The conduct of the Financial Conduct Authority (FCA) in this case should increase the likelihood of [it] doing the same in relation to Credit Suisse and VTB for their participation in the secret loans to Mozambique,” the nongovernmental organisation’s publicity officer said.

Speaking to Lusa about the FCA’s fining Merrill Lynch for lack of transparency, Tim Jones added that he hoped to see investigations into allegations that these two banks did not investigate the recipients of the loans and the financial situation of the companies to whom they were lending about US$1.4 billion properly.

“In addition to investigating whether transparency regulations have been complied with, as stated by the audit of the loans to Mozambique, FCA should also investigate whether banks carried out the extensive due diligence which is required by UK legislation on money laundering,” Jones said.

Due diligence is the set of inquiries and investigations that financial entities must make before lending money or conducting financial transactions with third parties, and includes, among others things, establishing who the true owners of companies are; whether the accounts of the companies are reliable; and if the loan obeys all the regulations of the country where the company is headquartered.

The JDC is part of a global movement to “break the chains of debt and for a new financial system that puts people first”, the movement’s website reads, and it has taken a very critical position on the debts contracted by Mozambique Asset Management and Proindicus, both guaranteed by the Mozambican state.

“The ultimate victim of the secret loans is the people of Mozambique, who should not have to take on any debt, but [rather be] compensated for the damage caused,” Jones told Lusa.

The FCA this week fined Merrill Lynch International, which is owned by the Bank of America, for failing to report GBP68.5 millions’-worth of financial derivative transactions between February 2014 and February 2016.

According to the FCA, this is the first time that the new rules of the European Markets Infrastructure Regulation, adopted after the financial crisis of 2008, have been implemented.

Also Read: Merrill Lynch fined $45 million by U.K. for failing to report transactions

Source: Lusa