Standard Chartered Trust (Guernsey) will need to pay a financial penalty of £140,000 ($194,166, €161,033) as it failed to meet the minimum licensing criteria under the Bailiwick’s fiduciary law.
The Guernsey Financial Services Commission (GFSC) said that, between 2012 and 2016, it found a range of “serious issues” related to the firm’s compliance, financial crime risk assessments, onboarding and due diligence processes.
On 19 May 2020, the Channel Island’s royal court placed Standard Chartered Trust (Guernsey) in liquidation in order to wind it up.
The Standard Chartered subsidiary was first established in 1991 and given a full licence to undertake fiduciary services. Its primary business was the establishment and full administration of trusts, managed company structures and estate planning.
The majority of its clients were high-risk, the GFSC said.
Timeline
In 2012, an assessment of the trust company was carried out which highlighted a number of issues regarding its compliance function and deficiencies in the periodic review process.
This prompted the Guernsey regulator to undertake a full risk assessment of Standard Chartered Trust in May 2014. It discovered that the firm had already set out a risk mitigation plan which involved 10 work-streams related to areas of the business that needed remediation, including client risk assessments.
The full risk analysis was then followed up with a visit by the GFSC in December 2015. The watchdog noted that while some progress had been made with the firm’s 10-point plan, there were still concerns on its “over-reliance on manual processes, and that there was an ongoing financial crime risk associated with the ever increasing amount of action points arising from the ongoing client risk assessment project”.
As a result, the regulator imposed two risk mitigation plans on Standard Chartered Trust (SCT).
But in July 2016, the company informed the GFSC it intended to close down within the following 12 months and that all its clients were going to be transferred to either Standard Chartered Trust (Singapore) or to another Guernsey provider.
The watchdog then imposed a number of licence conditions, to which the firm agreed, to make sure that financial crimes risks would be appropriately mitigated during the wind down period.
One of the conditions required SCT to appoint an external company, which was named in October 2016, to run an independent assessment of its client files.
But in a subsequent full risk assessment by the regulator in December 2016; additional serious risks were identified in relation to financial crime control failings related to client files.
The commission decided to start an investigation into SCT Guernsey in May 2017, which led to the royal court ordering the firm to wind up and the GFSC to impose a £140,000 fine.
