Police probe into financial watchdog after money goes missing

A finance watchdog set up to improve the image of the City and improve regulation across the globe yesterday admitted it is being investigated by the police after a black hole appeared in its accounts.

The International Centre for Financial Regulation (ICFR), a group based at the heart of the Square Mile on Moorgate in the City of London, said that "internal investigations have revealed that a sum of money appears to be missing from the organisation's bank accounts".

The news may be an embarrassment to the group's founding partners, a list of City heavyweights that include Aviva, Barclays, Citigroup, HSBC, and UBS.

The Government and the City of London Corporation also back the body, which describes itself as the "only independent, non-partisan organisation to be exclusively focused on best practice in all aspects of financial regulation internationally".

The ICFR added that a "member of the management has been suspended pending the outcome of this inquiry", but would not rule in or rule out any of its executives.

Barbara Ridpath, chief executive of the ICFR said: "We consider this situation to be a serious one and it will have a bearing on the future of the ICFR. We are working urgently to find out exactly what has happened, and to resolve the situation in the best interests of all concerned."

While ICFR's troubles are an embarrassment, many of its backers have had more serious problems.

HSBC has been fined for money laundering; Standard Charterted for scheming with Iran to hide billions of pounds' worth of transactions from the US authorities, leaving the financial system susceptible to "terrorists" and "drug kingpins"; Barclays is caught up in the Libor fixing scandal, and many others.

The ICFR website says it believes in "the promotion of efficient, orderly and fair markets which offer appropriate protection for investors and retail consumers alike".