Y v The Chairman of the GFSC and HMP - Final Decision (2018-11-29)

Summary

This is a Royal Court of Guernsey judgment (Ordinary Division) deciding an appeal brought by an individual referred to as Y against sanctions imposed by the Chairman of the GFSC (acting through a Senior Decision Maker) in a Final Notice dated 8 June 2018. It is a judicial decision on a specific enforcement case, not a rule or guidance document, but it is instructive for how the GFSC's enforcement powers under the Fiduciaries Law and the FSC Law are applied and reviewed.

The underlying GFSC sanctions arose from Y forming companies via a licensed fiduciary's Guernsey Registry portal while also running a private accountancy practice, allegedly in breach of the Regulation of Fiduciaries, Administration Businesses and Company Directors etc (Bailiwick of Guernsey) Law, 2000. The SDM had imposed a four year prohibition on Y holding director, controller, MLRO/Compliance Officer and similar roles, disapplied a statutory exemption for four years, imposed a GBP 13,000 discretionary financial penalty under section 11D of the FSC Law, and directed publication of a public statement under section 11C.

• Sanctions under appeal: Four year prohibition orders on holding director, controller, partner, manager, financial adviser or MLRO/Compliance Officer roles; four year disapplication of the section 3(1)(g) Fiduciaries Law exemption; a GBP 13,000 financial penalty; and an eleven page public statement.
• Grounds of appeal: Y argued the SDM acted ultra vires, unreasonably, disproportionately, and without proper regard to statutory criteria, and sought a declaration of incompatibility under the Human Rights (Bailiwick of Guernsey) Law, 2000 on the basis the process was not before an independent tribunal.
• Interim relief: The Court had earlier ordered the public statement be removed from the GFSC website pending determination of the appeal, under section 11H(6) of the FSC Law.
• Outcome: The Court allowed Y's appeal in part, but dismissed the appeal against the discretionary financial penalty, and declined to make the declaration of incompatibility sought. Costs of the appeal were reserved.

For compliance officers, the decision illustrates the scope and limits of GFSC enforcement powers (prohibition orders, disapplication of licensing exemptions, financial penalties, and public statements) under the FSC Law and the Fiduciaries Law, and the Royal Court's approach to reviewing proportionality, jurisdiction, and Article 6 fair hearing arguments in GFSC enforcement appeals. It does not create new ongoing regulatory obligations for the sector generally.

Applies to

licensed fiduciaries, persons acting as director, controller, partner, manager, financial adviser, general representative or authorised insurance representative within GFSC licensees, Money Laundering Reporting Officers and Compliance Officers within GFSC-licensed persons, accountants registered with the GFSC under the Criminal Justice (Proceeds of Crime) (Legal Professionals, Accountants and Estate Agents) (Bailiwick of Guernsey) Regulations, 2008