The FCA has imposed a £1,662,700 fine on Mako Financial Markets Partnership LLP (Mako) for failing to implement effective systems and controls to prevent financial crime.

Despite having policies and procedures in place, Mako failed to apply them effectively, leaving the firm vulnerable to financial misconduct.

This marks the eighth enforcement case brought by the FCA in its investigation into cum-ex trading. In collaboration with EU and global law enforcement agencies, the FCA has now issued over £30 million in fines related to this trading activity.

Between December 2013 and November 2015, Mako executed over-the-counter equity trades on behalf of clients from the Solo Group, involving approximately £68.6 billion in Danish equities and £23.6 billion in Belgian equities. The firm earned around £1.45 million in commissions from these transactions.

The trading activity was circular in nature—an indicator of potential financial crime—suggesting it was conducted to facilitate withholding tax (WHT) reclaims in Denmark and Belgium. Several individuals have since been convicted in Denmark for their roles in the scheme.

Additionally, Mako failed to recognize and address red flags in other transactions linked to the Solo Group. These included a series of deals with no clear economic rationale, leading to a €2 million loss for the Solo Group’s controller while benefiting his associates. Furthermore, Mako accepted payments from a UAE-based third party to cover outstanding debts of Solo Group clients without conducting due diligence—significantly increasing the risk of money laundering.

Therese Chambers, Joint Executive Director of Enforcement and Market Oversight at the FCA, emphasized the severity of the issue:

*”Mako failed to identify clear warning signs and facilitated highly suspicious trading, making it susceptible to financial crime.

For the UK financial sector to thrive, investor trust is essential. That’s why eliminating such unacceptable practices is crucial to safeguarding the integrity and reputation of UK markets.”*

Mako did not contest the FCA’s findings and agreed to settle, qualifying for a 30% reduction in its fine under the FCA’s settlement discount scheme.