ZEDRA and BELASKO should have known their CUSTOMER A - do you have an unknown CUSTOMER A

Zedra Trust Company (Guernsey) Limited, Mr Colin Andrew Borman, and Belasko Jersey Limited's oversight regarding CUSTOMER A's (DIFFERENT CUSTOMERS) risks is a stark reminder of the consequences of inadequate due diligence—£90,000 AND £19,211.73 in fines is a hefty price for not fully understanding your customer.

The fines imposed by the Jersey Financial Services Commission (JFSC) on Belasko Jersey Limited and the Guernsey Financial Services Commission (GFSC) on Zedra Trust Company (Guernsey) Limited and Mr Colin Andrew Borman highlight several important lessons for financial services firms:

1. Importance of Robust AML/CFT Controls
1. Both cases underscore the critical need for effective Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) systems and controls.
2. The fines imposed on Belasko Jersey Limited and Zedra Trust Company (Guernsey) Limited and Mr. Colin Andrew Borman serve as stark reminders of the consequences of inadequate AML/CFT controls. 
3. Belasko Jersey Limited was fined for failing to apply adequate systems and controls to mitigate financial crime risks associated with a high-risk customer.
4. Similarly, Zedra Trust Company and Mr. Borman failed to identify and manage financial crime risks, particularly in relation to a client involved in potentially fraudulent activities.

2. Enhanced Due Diligence (EDD)
1. The fines emphasize the absolute necessity of conducting thorough due diligence, especially for high-risk clients.
2. Belasko Jersey's failure to obtain comprehensive customer due diligence (CDD) and ongoing monitoring measures left it vulnerable to financial crime.
3. Zedra Trust Company also failed to perform effective risk assessments and identify red flags in their client relationship.
4. The severity of the fines underscores the need for meticulous due diligence in all client relationships.

3. Governance and Compliance
1. These fines have had significant repercussions on the companies involved. Belasko Jersey had to restructure its leadership and governance framework following the fine
2. Zedra Trust Company faced substantial penalties due to multiple human failures and inadequate compliance procedure.
3. This underscores the importance of strong governance and compliance frameworks in the financial services sector.

4. Proactive Risk Management
1. Both cases highlight the importance of proactive risk management.
2. Firms must regularly review and update their risk assessments and ensure that all staff are aware of and adhere to compliance procedures.
3. The lack of timely risk assessments and failure to follow internal procedures were key issues in both fines.

5. Accountability and Transparency
1. Regulatory bodies expect transparency and accountability from financial institutions.
2. The public statements and fines serve as a reminder that regulatory compliance is not optional and that failures can lead to significant financial and reputational damage.

These lessons are crucial for maintaining the integrity and stability of the financial services industry and protecting it from financial crime risks.

These findings reveal a critical failure to manage financial crime risks and highlight severe deficiencies in compliance and due diligence within the Licensee.

An independent review is crucial to prevent such situations from arising. However, how many license holders truly have a robust independent function in place? Comsure can provide the second—and third-line defence your business needs to fortify its operations.

Please contact us today for a complimentary consultation and take the first step towards safeguarding your business.

• Mathew Beale - Chartered FCSI
• mathewbeale@comsuregroup.com
• No 1 Bond Street Chambers, St Helier, Jersey, Channel Islands, JE2 3NP
• T (Jersey) +44 1534 733-588 /+44 7797 747-490

Source:  

• JFSC imposes a civil financial penalty on Belasko Jersey Limited for ....
• https://www.jerseyfsc.org/news-and-events/jfsc-imposes-a-civil-financial-penalty-on-belasko-jersey-limited-for-amlcft-systems-and-controls-contraventions/.
• https://www.jerseyfsc.org/news-and-events/belasko-jersey-limited/
•  Zedra Trust Company (Guernsey) Limited and Mr Colin Andrew Borman.
• https://www.gfsc.gg/news/zedra-trust-company-guernsey-limited-and-mr-colin-andrew-borman.