The Financial Services Authority has fined Bridgewater (IOM) Limited £225,085 after it identified a ‘number of regulatory failings’ and removed a number of company directors.
The company, based on Victoria Street in Douglas, specialises in financial services and offers corporate and trust services and fund administration to collective investment schemes.
In its report, the FSA found the company had not been meeting its requirements in relation to conducting its business risk assessment, customer risk assessments, technology risk assessment, its ongoing monitoring, had not been fully understanding the use of the complex structures within its business relationships and had not risk assessed these structures accordingly and was not fully meeting the Code requirements in relation to establishing the source of funds of customers (and source of wealth where required).
In a statement, the FSA said: ‘In January 2020, the Authority conducted a supervisory inspection in respect of Bridgewater in accordance with its statutory powers under Schedule 2 to the Act. The Inspection, based on a sample of files, identified contraventions of the Anti-Money Laundering and Countering the Financing of Terrorism Code 2019. 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.’
Third Party Report
It adds that following this, it appointed a third party to produce a report pertaining to the ‘extent and appropriateness of Bridgewater’s anti-financial crime framework’. That report, while acknowledging that Bridgewater had made improvements, also ‘identified a number of concerns regarding how Bridgewater identified and mitigated conflicts of interest within its existing customer base’.
It adds: ‘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 of Bridgewater. Such failure to record these conflicts of interest is contrary to the requirements of the Financial Services Rule Book 2016 and contrary to Bridgewater’s own internal policies and procedures. The nature, extent and type of unrecorded conflicts of interest were of such a nature and frequency as to cause the Authority to conclude that the Civil Penalty was required.’
Following this report, the FSA continued its investigations into the company and its appropriateness to maintain its licence. The FSA said: ‘Following the Inspection, Bridgewater has been progressing its own remediation plan, hired additional professional advisors to support the process and provided regular updates in respect of the same to the Authority.’
It added that the FSA identified a number of issues which caused it to have concerns over a number of individuals in the company and their fitness and propriety to undertake ‘certain controlled functions’.
The FSA said: ‘The Authority has identified matters that caused it to assess the fitness and propriety of the persons undertaking certain Controlled Functions at Bridgewater. Such assessments, by the Authority, have caused it to conclude that the individuals holding such roles are not fit and proper to hold such roles in Bridgewater and, in certain instances, in the regulated sector in the Isle of Man and the Authority has therefore determined that it is appropriate, reasonable and proportionate for it to exercise its powers under s.10A of the Act to prohibit those role holders from continuing in those positions.’
These 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), Stephen Corran (director, head of compliance, deputy money laundering reporting officer, director of client companies and company secretary at Bridgewater at all relevant times) and Brett Armitage (director, director of client companies and money laundering reporting officer at Bridgewater at all relevant times). However the FSA does say they all accepted responsibility for the issues identified.
Following these investigations, the FSA has 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.
‘In accordance with the EDMP, Bridgewater entered into settlement discussions with the Authority and, having accepted the conclusions of the s.23 report, the Inspection and the Investigation, it sought to finalise and remediate matters expeditiously.’