Sunday, April 11, 2021

Three Jersey-based firms fined £700,000 for violating anti-money laundering laws

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A FINE of more than £700,000 has been imposed on three Jersey-based firms owned by a multi-national bank for breaching rules designed to prevent money laundering and financial crime.

The actions of a trio of S G Kleinwort Hambros companies, which were found to have made a series of compliance breaches between January 2018 and May 2019, have also been heavily criticised in a public statement released by the Jersey Financial Services Commission.

The sanctions come after another finance firm, LGL Trustees, learned in the Royal Court this week that it could face a fine of up to £650,000 for oversights relating to a client’s links to corrupt practices in the African nation of Angola.

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A statement released by the JFSC, the Island’s financial regulator, says that penalties totalling £719,000 have been made against the S G Kleinwort Hambros firms.

Breaches identified included inadequate monitoring of controls to prevent money laundering and financing of terrorism, which the JFSC said could damage the reputation of the Island’s finance sector. No evidence of enabling any financial crime was identified.

Concerns were also raised about staff resourcing for compliance work, failure to respond to rule breaches that were discovered, not notifying the JFSC of breaches and inadequate documentation of compliance matters at board meetings.

JFSC director general Martin Moloney said: ‘This is the third time the JFSC has used its powers to fine businesses in Jersey’s financial services industry for breaching regulatory requirements.

‘The three S G Kleinwort Hambros firms acknowledged their failings at an early stage and have taken steps to make material changes to strengthen their governance arrangements and compliance systems and controls.

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‘We do not use this sanction lightly and intend it to be a deterrent for all regulated businesses. While there is no evidence the three SGKH firms facilitated financial crime, firms must make sure they are not at risk of being used in this way, as such use would undermine the integrity and stability of Jersey’s financial services industry.’

The JFSC statement says that the issues flagged about SGKH’s compliance could have been ‘mitigated’ had the company’s board acted quicker.

The fines could have totalled £1.4 million in civil penalties altogether but a 50% discount was agreed due to early settlement. The firms fined are: S G Kleinwort Hambros Bank (CI) Limited (SGKH Bank); S G Kleinwort Hambros Trust Company (CI) Limited (SGKH Trust) and S G Kleinwort Hambros Corporate Services (CI) Limited (SGKH Corporate).

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