On 16 February 2021, the Jersey Financial Services Commission (“JFSC”) issued a public statement relating to civil financial penalties totalling about £700,000 imposed on three companies in the SG Kleinwort Hambro (SGKH) group for failure to organise and control their affairs effectively for the proper performance of their business activities and to be able to demonstrate the existence of adequate risk management systems and a breach of the requirement to deal with the JFSC in an open and co-operative manner. These failures left SGKH under-informed of compliance risk and whether they there were operating robust systems and controls to, inter alia, mitigate against money laundering and the financing of terrorism. 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.
Aggravating factors include: SGWH Bank’s regulatory compliance record; the failure by the SGKH entities to act with the expected candour with the JFSC by failing to notify the JFSC of regulatory breaches promptly and completely; and the failure by the boards to materially recognise and/or address concerns raised by their compliance function and the JFSC.
Mitigating factors include: post the on-site examination, the SGKH entities co-operated fully with the JFSC, the boards immediately responded to the matters identified and retained the services of a regulatory consulting firm to support them in addressing the findings, identify root causes and implement a significant remediation exercise; the remediation exercise has been fully supported internally; significant financial resources being invested in further strengthening the SGKH entities’ commitment to enhancing and developing its business operations in Jersey, including the compliance function and no customer/client has suffered losses as a result of the matters identified.
