The Guernsey Financial Services Commission (GFSC) has handed down financial penalties to Louvre Fund Services and four of its directors.
This is the second time the firm faced such sanctions for breaches of compliance and regulatory requirements.
The watchdog has imposed a collective fine of £203,000 ($264,018, €244,072), broken down as follows:
- £77,000 to Louvre Fund Services;
- £52,500 to Kevin Gilligan;
- £31,500 to Charles Tracy;
- £28,000 to Derek Baudains; and,
- £14,000 to Julian Lane.
Louvre Fund, along with Gilligan and Tracy, had already been hit with penalties in 2016, after the GFSC found the company mis-administered a collective investment scheme and lacked due diligence procedures.
The duo was also found to not be fit and proper people and have been stripped of an exemption allowing them to be directors of companies for six years and two months, and three years and six months, respectively.
A spokesperson for the regulator told International Adviser: “The role of a director of a fiduciary is a regulated activity for which a fiduciary licence is required.
“There is a limited exemption, in the Fiduciaries Law (section 3(1)(g)), which allows individuals to hold up to a maximum of six directorships without the need to obtain a personal fiduciary licence.
“The commission has the power to disapply this exemption if it determines that an individual is not fit and proper to be a director of a company.
“When an individual is denied access to this exemption they are prevented from acting as a director in a business which carries on activities which are regulated by the commission.”
Failure to comply
In addition to the first investigation and subsequent penalty, this time the Guernsey watchdog found that Louvre failed to correctly administer certain unnamed funds, located outside of the Channel Island.
“The commission expects a licensee [Louvre] to understand and comply with its contractual and other legal obligations, and the directors to operate in accordance with all relevant legislation,” the GFSC said.
According to the regulator, the fund services provider and its directors failed to demonstrate proof of asset ownership, present documents stating the location of such assets and provide information showing the exact number of assets acquired.
On top of that, Louvre and its directors did not “adequately identify and manage conflicts of interests”, despite having a policy in place to deal with the matter.
Lack of documents
Even though the firm tried to improve its client practices in 2018, the regulator found that it held incomplete due diligence for around 64% of investors.
The failings then led to Louvre not being able to effectively monitor business relationships and asset transactions.
This meant that the company was unaware of when assets were purchased, whether it had evidence of the transactions, and ended up relying too much on verbal reporting.
The lack of documentation left Louvre unable to retrieve information to present to the GFSC, which also found that it lacked oversight and procedures to prevent and detect money laundering and terrorism financing.
IA contacted Louvre Fund Services for comment, but the firm did not reply in time for publication.