The Isle of Man Financial Services Authority (IoMFSA) has fined trust and corporate services provider Bridgewater (IOM) £321,550 ($428,645, €381,904), after it uncovered a number of regulatory failings.
The civil penalty has been discounted by 30% to £225,085.
The IoMFSA said on 24 November 2021 that the “level of the civil penalty reflects not only the severity of the failures admitted but also the fact that Bridgewater and its directors co-operated with the authority and agreed settlement at an early stage”.
The Isle of Man-based firm holds three licences:
- Class 3 – Services to Collective Investment Schemes;
- Class 4 – Corporate Services; and
- Class 5 – Trust Services
It previously possessed a Class 7 licence (Management or Administration to Licenceholders), which it surrendered on 25 June 2020.
Investigation
In January 2020, the IoMFSA conducted a supervisory inspection of Bridgewater and “identified contraventions” of the Anti-Money Laundering and Countering the Financing of Terrorism Code 2019.
It said that the “contraventions are serious regulatory failings heightened by the fact that a significant proportion of Bridgewater’s customer base, when assessed against the requirements of the code, are classified as high-risk”.
The IoMFSA appointed a third-party to produce a report on Bridgewater’s regulatory failings and continued to investigate whether Bridgewater was ‘fit and proper’ to hold some or all of its licences.
The investigation found that, between 2010 and 2021, the firm:
- had not fully met the 2019 code requirements in relation to conducting its business risk, customer risk and technology risk assessments, as well as ongoing monitoring;
- had not fully understood the use of the complex structures within its business relationships and had not risk assessed the structures; and
- did not fully meet the 2019 code requirements in relation to establishing the source of funds of customers and source of wealth where required.
Following the inspection, Bridgewater “has been progressing its own remediation plan, hired additional professional advisers to support the process and provided regular updates”, the IoMFSA said.
Conflicts of interest
The Isle of Man regulator also found that a number of entities administered by Bridgewater were not complying with their own respective obligations under the 2019 code.
In addition, the investigation identified a number of conflicts of interest, personally related to each of the directors of Bridgewater, which were not recorded on the conflicts register.
The regulator said it was “appropriate, reasonable and proportionate” for it to exercise its powers “to prohibit those role holders from continuing in those positions”.
Measures have been taken against:
- Matthias Bolliger – director and director of client companies at Bridgewater from 28 February 2011 until 20 January 2015 and from 27 September 2019 until 14 May 2021, respectively;
- Stephen Corran – director, head of compliance, deputy money laundering reporting officer, director of client companies and company secretary at Bridgewater between 2010-2021; and
- Brett Armitage – director, director of client companies and money laundering reporting officer at Bridgewater between 2010-2021.
Accept failings
The IoMFSA said: “The authority is satisfied that the imposition of the civil penalty on Bridgewater, in conjunction with other ancillary measures taken, reflects the serious nature of the non-compliance and cultural issues identified.
“Without the changes and personnel enhancements to its board and controlled function holders brought about by Bridgewater, the authority would likely have been considering a revocation of its licence.
“The authority is satisfied that the directors of Bridgewater, at this time, recognise and accept the failings of Bridgewater. The authority is satisfied that Bridgewater and the directors of Bridgewater cooperated fully and engaged positively with the authority’s enforcement decision-making process.
“Bridgewater is actively engaged with the authority to ensure compliance with its regulatory obligations.”
International Adviser contacted Bridgewater (IOM) and the firm declined to comment.
