Latest JFSC public statement and civil penalty: why all regulated businesses should take notice

A public statement has been issued by the JFSC, with a civil financial penalty of £115,575, for breaches of the Code of Practice for Trust Company Business. This mainly relates to historic business acquisitions and issues attributable to earlier remediation work being ineffective. There is a clear focus on maintaining adequate, risk based systems and controls and corporate governance arrangements to mitigate the risk of money laundering. The deficiencies related to customer due diligence and risk assessments, record keeping and the compliance function and they were considered significant due to the risk of financial crime.

We value these statements from the JFSC because they provide an insight into what the JFSC expects of regulated businesses. Alongside our experience of working with clients to successfully resolve potential regulatory issues, we use these insights to deliver clear and practical advice on how to meet regulatory obligations. We are reviewing this latest statement in detail and would advise regulated businesses to assess how their systems and controls and governance arrangements measure up against the points highlighted by the JFSC. The board of a regulated business should have the opportunity to hear how its existing framework and practice avoids the issues identified in this statement, to discuss and challenge that conclusion and, if necessary, to mandate some work to improve any potential points of weakness arising from the discussion. The business should record the discussion in its board minutes and follow up any action points arising. This would be useful evidence of how the business uses material from the JFSC to help maintain its systems and controls and ensure the continuing adequacy of its governance arrangements.

If we can help to provide comfort and clarification in relation to any concerns arising from this public statement, please do get in touch with our financial services and regulatory team.