The Financial Services Business (Enforcement Powers) (Bailiwick of Guernsey) Law, 2020 (the “Enforcement Powers Law”)
The Regulation of Fiduciaries, Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2020 (the “Fiduciaries Law”)[1]
The Criminal Justice (Proceeds of Crime) (Financial Services Businesses) (Bailiwick of Guernsey)) Regulations, 2007 (the “Regulations”)
Schedule 3 to Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law, 1999 (“Schedule 3”)[2]
The Handbook on Countering Financial Crime and Terrorist Financing (the “Handbook”) The Principles of Conduct of Finance Business (the “Principles of Conduct”)
Trident Trust Company (Guernsey) Limited (the “Licensee” or the “Firm”)
and
Mr Mark Wilson Le Tissier (“Mr Le Tissier”)
Mr Ryan Daniel Dekker (“Mr Dekker”)
Mrs Boonyasinee (“Kwan”) Queripel (“Mrs Queripel”)
On 19 June 2024, the Guernsey Financial Services Commission (“the Commission”) decided:
To impose a financial penalty of £266,000 on the Licensee under section 39 of the Enforcement Powers Law;
To impose a financial penalty of £63,000 on Mr Le Tissier under section 39 of the Enforcement Powers Law;
To impose a financial penalty of £63,000 on Mr Dekker under section 39 of the Enforcement Powers Law;
To impose a financial penalty of £39,900 on Mrs Queripel under section 39 of the Enforcement Powers Law;
To make an order under section 33 of the Enforcement Powers Law prohibiting Mr Le Tissier from holding a supervised role for a period of 2 years 10 months;
To make an order under section 33 of the Enforcement Powers Law prohibiting Mr Dekker from holding a supervised role for a period of 2 years 10 months;
To make an order under section 33 of the Enforcement Powers Law prohibiting Mrs Queripel from holding a supervised role for a period of 1 year 9 months;
To issue a Notice under section 32 of the Enforcement Powers Law disapplying the exemption set out in 3(1)(g) of the Fiduciaries Law in respect of Mr Le Tissier for a period of 2 years 10 months;
To issue a Notice under section 32 of the Enforcement Powers Law disapplying the exemption set out in 3(1)(g) of the Fiduciaries Law in respect of Mr Dekker for a period of 2 years 10 months;
To issue a Notice under section 32 of the Enforcement Powers Law disapplying the exemption set out in 3(1)(g) of the Fiduciaries Law in respect of Mrs Queripel for a period of 1 year 9 months; and
To make this public statement under section 38 of the Enforcement Powers Law.
The Commission considered it reasonable and necessary to make these decisions having concluded that the Licensee, Mr Le Tissier, Mr Dekker and Mrs Queripel had failed to ensure compliance with the regulatory requirements; and failed to meet the Minimum Criteria for Licensing (the “MCL”), pursuant to Schedule 1 of the Fiduciaries Law. The findings in this case were serious and spanned a significant period, including after 13 November 2017 when The Financial Services Commission (Bailiwick of Guernsey) (Amendment) Law, 2016 came into force, which increased the maximum level of financial penalties.
Since 2021 the Licensee has undertaken a significant programme of remediation. The Commission is satisfied that the Licensee can continue to operate under its full fiduciary licence.
Background
The Firm was established in Guernsey in May 1989 and undertakes fiduciary activities under a full fiduciary licence.
The Licensee provides the full range of corporate and fiduciary services, including the formation, management and administration of trusts and companies. This includes the provision of directors, company secretaries, registered office and resident agency services (“RORA”).
Mr Le Tissier was the Managing Director of the Firm from 17 December 1999 to 31 March 2015 and European Managing Director from 1 April 2015 to May 2023.
Mr Dekker was a Director of the Firm from 23 August 2011 to 29 July 2022 and Managing Director from 1 January 2020 to 29 July 2022.
Mrs Queripel was the Compliance Officer at the Firm from 16 July 2015 to 30 March 2019, its Money Laundering Reporting Officer (“MLRO”) and Money Laundering Compliance Officer (“MLCO”) from 31 March 2019 to 1 June 2021.
The Commission’s investigation began following an on-site visit to the Licensee in March 2020 which identified multiple breaches of the regulatory requirements in a high proportion of the client files reviewed; including 10 high risk business relationships which had deficiencies associated to either the source of funds, source of wealth, or both. This was despite a previous undertaking by the Firm that it would review all its high-risk relationships during 2019, and where any deficiencies were identified in respect of the source of funds and source of wealth, those deficiencies would be remediated.
Findings
The Licensee established three Incorporated Cell Companies which in turn established 140 incorporated cells (“ICs”) to provide crew, management and payroll services on behalf of yacht management companies managing motor vessels (including superyachts) owned by ultra-high net worth individuals (the “UBOs”), including Politically Exposed Persons (“PEPs”) from high risk jurisdictions.
When considering its exposure to AML/CFT risks, the Licensee did not take into account the risks presented by the UBOs themselves and only considered the yacht management companies that were acting on the UBO’s behalf.
From at least August 2019, the Licensee understood that the Bailiwick of Guernsey’s AML/CFT regulatory framework should be applied both prospectively and retrospectively to the private yacht marine business from inception of each of the client relationships, however continued a narrative to the Commission during 2020 that this line of business was non-regulated and failed to take immediate action to remediate those business relationships whilst continuing to receive funds into the structures from unknown and therefore unverified sources. Between 1 January 2019 and 4 June 2021, one structure alone received approximately £178 million via a yacht management company without the Firm establishing the provenance of the funds.
The Firm also arranged for funds due to each of the ICs it administered, to be transferred to a third-party bank account (the yacht management company account) and not to the IC’s own bank account. This was despite a commercial contract requiring the payment be paid direct to the IC bank account. The investigation found that this payment process unintentionally disguised the true provenance of the funds deriving from the UBOs of the motor vessels.
At least 17 ICs within one structure received funds via the yacht management company from UBOs linked with allegations of money laundering, corruption, insider trading, bribery, forgery and ties to organised crime. This meant that the Licensee was running a high risk of being potentially concerned in dealing with the proceeds of crime, thereby putting the Bailiwick at risk of reputational damage as an international finance centre.
Examples of the business relationships: –
Business relationship 1
The Firm established an IC to provide crew to work upon a superyacht which it had assessed as low risk. The IC administered by the Firm received funds into its Guernsey bank account via the yacht management company on a monthly basis so that it could honour its payroll commitments. The IC issued invoices to the underlying special purpose vehicle owning the yacht (the “SPV”) and requested the funds be paid to the bank account of the yacht management company (effectively a third party in the transaction). The funds were then transferred to the bank account of the IC in Guernsey to meet its payroll commitments. This potentially obfuscated the identity of the UBO to the bank in Guernsey. The UBO was later found to be linked to lucrative deals in Country B involving land, oil, diamonds and telecoms and was under criminal investigation for corruption and was alleged to have exploited Country B.
The IC administered by the Firm received significant sums into its bank accounts via the yacht management company and without establishing the provenance of the funds.
Business relationship 2
The UBO of another IC established and administered by the Firm in exactly the same way as described in example 1 received approximately 300,000 euros per month, via the yacht management company, into its Guernsey bank account so that it could honour its payroll commitments to the crew. As above the IC issued invoices to the SPV and requested the funds be paid to the bank account of the yacht management company which then transferred the funds to the bank account of the IC. The UBO was later found to be linked to an investigation into suspected fraud, bribery and corruption and was alleged to have paid bribes to secure mining operations (a high-risk sector) in Country A (a country presenting a higher risk of money laundering, terrorist financing and/or proliferation of financing). The UBO also had close ties to a former PEP who was implicated in a money laundering investigation in a European country.
Business relationship 3
Another IC administered by the Firm received approximately 100,000 euros per month into its Guernsey bank account on a monthly basis (via the yacht management company) so that it could honour its payroll commitments. The IC issued invoices to the SPV and whilst on this occasion it requested the funds be paid to its own bank account, the funds were actually paid to the account of the yacht management company before being transferred to the IC account. The UBO was later found to be an entrepreneur in Country C linked to the property sector and had links to allegations of tax evasion and extortion.
In particular the Commission found:
The Licensee failed to document a suitable and sufficient business risk assessment (“BRA”)
Licensees are required under the Regulations, Schedule 3 and the rules in the Handbook, to carry out and document a suitable and sufficient money laundering business risk assessment which is specific to the specified business and to keep it up to date.
The Firm failed to include the risk factors associated with the business relationships with the private yacht marine business into its BRA and subsequently failed to make changes to its BRA once it had identified this deficiency.
If the Firm had factored these risks into its BRA, it would have identified that the Firm’s overall exposure to high-risk clients was outside its own risk appetite.
The Licensee failed to regularly review its risk assessments
The Regulations, Schedule 3 and the rules in the Handbook require that in order for a financial services business to consider the extent of its potential exposure to the risk of money laundering and terrorist financing it must assess the risk of any proposed business relationship prior to the establishment of that relationship and regularly review such a risk assessment so as to keep it up to date.
The Licensee failed to regularly review its relationship risk assessments for the private yacht marine business and failed to ensure that all the relevant risk factors were considered before making a determination on the level of risk, including the origin of the funds deriving from the UBOs of the motor vessels.
Failure to carry out customer due diligence
The customer due diligence requirements in the Regulations, Schedule 3 and the Handbook specify that firms must make a determination as to whether the customer is acting on behalf of another person and if the customer is so acting, take reasonable measures to identify that other person and obtain sufficient identification data to verify the identity of that person. In addition, there is a requirement to determine whether the beneficial owner is a PEP and to understand the purpose and intended nature of each business relationship.
The Licensee failed to fully understand the purpose and intended nature of the relationships associated with the private yacht marine business and failed to determine, in accordance with the requirements, that the yacht management company was acting on behalf of the UBOs of the motor vessels. As a consequence, the Firm failed to identify and verify the identity of the UBOs of the ICs (a number of which were discovered to be PEPs) between 2011 and 2019. After October 2019 Trident had still failed to obtain any information on 37 UBOs who remained unidentified.
The Licensee failed to take reasonable measures to establish the source of funds (“SOF”) and source of wealth (“SOW”) of its high risk business relationships
The Regulations, Schedule 3 and the rules in the Handbook detail the enhanced customer due diligence (“ECDD”) requirements required for high-risk customers and, in particular, the requirement to take reasonable measures to establish the source of any funds and of the wealth of the customer, beneficial owner and underlying principal.
The Licensee failed to take reasonable measures to establish the SOF and SOW of its high-risk business relationships once it had identified a majority of the UBOs of the motor vessels in October 2019.
The Licensee failed to perform ongoing and effective monitoring of its business relationships
The Regulations and Schedule 3 detail the requirements to perform ongoing and effective monitoring of existing business relationships, including scrutiny of any transactions or other activity. Regulation 5 also details that for high-risk clients there must be more frequent and more extensive monitoring.
The Licensee failed to perform ongoing and effective monitoring of its business relationships associated with the private yacht marine business, in particular scrutiny of any adverse media, transactions or other activity and consider the possibility for legal persons and legal arrangements to be used as vehicles for money laundering and terrorist financing.
As a result of failing to identify the UBOs of the motor vessels for a period of 8 years, the Licensee had also failed to carry out more frequent extensive monitoring on these high-risk business relationships.
The Licensee failed to ensure it established and maintained effective procedures and controls to forestall, prevent and detect money laundering and terrorist financing; and as necessary to report suspicion
The Regulations and Schedule 3 stipulate that licensees must ensure compliance with the requirements to make disclosures under Part 1 of the Disclosure (Bailiwick of Guernsey) Law 2007 and sections 15 and 15A of the Terrorism and Crime (Bailiwick of Guernsey) Law 2002.
The Licensee failed to apply its policies, procedures and controls to the private yacht marine business in order to make disclosures to the Guernsey Financial Intelligence Unit (the “FIU”).
As a consequence of failing to identify a majority of the UBOs, the Firm could not identify whether it was in receipt of the proceeds of crime to enable it to make disclosures to the FIU between 2011 and 2019, some 8 years after the structure was established.
The Licensee failed to apply its sanctions policies, procedures and controls effectively.
Rule 12.9.23 of the Handbook requires a firm to have in place appropriate and effective policies, procedures, and controls to identify, in a timely manner, whether a prospective or existing customer, or any beneficial owner, key principal or other connected party, is the subject of a sanction issued by the UN, the EU or the States of Guernsey’s Policy and Resources Committee.
Rule 12.9.28 of the Handbook requires a firm to have in place a system and/or control to detect and block transactions connected with those natural persons, legal persons and legal arrangements designated by the Bailiwicks sanctions regime.
Rule 12.11.34 of the Handbook states that a firm must ensure that its compliance monitoring arrangements include an assessment of the effectiveness of the firm’s sanctions controls and their compliance with the Bailiwick’s sanctions regime.
As the Licensee had failed to identify the UBOs of the motor vessels, it was unable to identify and report any sanctioned individual associated with the private yacht marine business, which included ultra-high net worth individuals, including PEPs from high risk jurisdictions. This meant that the Firm’s sanctions controls were not appropriate or effective and did not comply with the sanctions regime in the Bailiwick.
The Licensee failed to keep a signed written record of the terms of agreement with its client
Principle 5 of the Code of Practice – Corporate Services Providers, 2009 requires a firm to discuss terms of business with each prospective client and keep written record of the terms of the agreement with each client, including evidence of the client’s agreement to those terms.
The Licensee failed to keep a signed written record of the terms of an agreement with a significant client that evidenced the client’s agreement to those terms.
Mr Le Tissier
The Commission’s investigation identified that Mr Le Tissier failed to fulfil the fit and proper requirements of the MCL.
Mr Le Tissier was the former Managing Director and European Managing Director of the Firm and had extensive experience of the regulatory framework and fiduciary business. He understood that the Firm was undertaking regulated activities and had been involved in the operations of the private yacht marine business, but failed to ensure the Firm applied the regulatory framework to the private yacht marine business, resulting in systemic breaches of the Regulations, the requirements under Schedule 3 and the Handbook.
Mr Le Tissier made material changes to minutes for a board meeting that discussed the serious deficiencies involving the private yacht marine business. This was after the Firm had been informed that it was being referred to the Enforcement Division and could have inadvertently misrepresented the actual discussions that took place during that meeting, if they had not been discovered at a later date.
This demonstrated a serious lack of competence, soundness of judgement and diligence.
Mr Dekker
The Commission’s investigation identified that Mr Dekker failed to fulfil the fit and proper requirements of the MCL.
Mr Dekker was the former Managing Director of the Firm from 2020 and had extensive experience of the regulatory framework and fiduciary business. He understood that the Firm was undertaking regulated activities and had been involved in the operations of the private yacht marine business, but failed to ensure the Firm applied the regulatory framework to the private yacht marine business, resulting in systemic breaches of the Regulations, the requirements under Schedule 3 and the Handbook.
Mr Dekker also failed to inform the Commission of the significant deficiencies in relation to the private yacht marine business and continued a narrative during 2020 that the business was non- regulated. He also failed to ensure that an accurate client list was provided to the Commission prior to the Commission’s onsite visit that failed to include the ICs, which could have prevented the Commission from reviewing those files, and concealed the significant AML/CFT deficiencies, if it had not been subsequently identified by the Commission.
This demonstrated a serious lack of competence, soundness of judgement and diligence.
Mrs Queripel
The Commission’s investigation identified that Mrs Queripel failed to fulfil the fit and proper requirements of the MCL.
Mrs Queripel was the former MLRO and MLCO of the Licensee and had extensive experience within the financial services sector, but failed to ensure that the Firm was applying its policies, procedures and controls to the private yacht marine business. Mrs Queripel failed to ensure the Firm identified all the UBOs of the superyachts.
Mrs Queripel was instrumental to the Firm’s failing to provide an accurate client list to the Commission prior to the Commission’s onsite visit. This could have prevented the Commission from reviewing those files and concealed the significant AML/CFT deficiencies if it had not been subsequently identified by the Commission.
The Commission found that she demonstrated a lack of understanding of the regulatory framework which resulted in systemic breaches of the Regulations, the requirements under Schedule 3 and the Handbook.
This demonstrated a serious lack of competence, soundness of judgement and diligence.
Aggravating Factors
Licensees are required to notify the Commission of any material failure to comply with the provisions of Schedule 3, the Handbook, any Enactments, or any serious breaches of the licensee’s policies, procedures or controls. The Firm failed to do this.
The Firm identified in 2019 that there were serious deficiencies in its AML/CFT policies, procedures and controls in relation to the private yacht marine book of business. The Firm failed to notify the Commission of the significant issues.
Mr Le Tissier, Mr Dekker and Mrs Queripel made a series of bad decisions in 2020 that could have concealed the significant AML/CFT deficiencies from the Commission prior to and during its on-site visit had the Commission not subsequently identified those deficiencies later. The Commission therefore found that each individual had failed to meet the fit and proper criteria in the MCL which individuals are required to meet to hold a supervised role.
Another serious issue identified by the Commission was that the Firm had inadvertently provided inaccurate and potentially misleading information to its bankers as to the true SOF of some of its clients, as it had incorrectly told its bankers that the SOF came from the yacht management companies rather than from the UBOs. This could have exposed the bank to the same unmitigated money laundering/terrorist financing risks which the Firm faced and potentially prevented the bank’s own internal controls from forestalling, preventing and detecting money laundering and terrorist financing.
Obliged entities, such as financial services businesses play a central role as gatekeepers in the Bailiwicks anti-money laundering and countering the financing of terrorism framework, so when one obliged entity (the Licensee) provides another obliged entity (a bank) with incomplete or obscured information, it is a matter that the Commission takes seriously.
The Firm also failed to take immediate action to remediate the private yacht marine business whilst it continued to provide services to the ICs.
Mitigating Factors
The Licensee, Mr Le Tissier and Mr Dekker have co-operated with the Commission since the investigation began at the end of 2020.
An extensive remediation programme has been implemented by the Licensee from 2021 to 2023. The Licensee has taken substantial steps and invested significant resources to remediate the failings identified in this public statement.
The Licensee, Mr Le Tissier, Mr Dekker and Mrs Queripel agreed to settle at an early stage of the process and this has been taken into account by applying a discount in relation to the sanctions.
[1] Which replaced the Regulation of Fiduciaries, Administration Businesses and Client Directors, etc (Bailiwick of Guernsey) Law, 2000 on 1 November 2021.
[2] Which replaced the Regulations on 31 March 2019.
 (Bailiwick of Guernsey) Law, 2020 (the “Enforcement Powers Law”) The Regulation of Fiduciaries,){kind=link}