Clive Neil Stewart Barton MBE, (R) Kathleen Gillen (R), Moore Stephens Jersey Partnership (2016-02-29)

Summary

This is a public statement issued by the Jersey Financial Services Commission (JFSC) under Article 25 of the Financial Services (Jersey) Law 1998 concerning failings identified in the trust company business operated by Moore Stephens Jersey Partnership and its affiliated 'First Island' entities. It names two former partners, Clive Neil Stewart Barton MBE and Kathleen Gillen, who were subject to individual directions restricting their future involvement in regulated business.

Issues identified

• Governance failings: A 2014 on-site examination, a co-signatories review and an independent consultant's report identified ineffective governance and inadequate compliance oversight within the MS trust company business.
• Compliance shortfalls: Failures included inadequate customer due diligence and PEP risk-rating, failure to document rationale for customer structures or verify source of wealth/funds, missed tax advice and disclosures, inconsistent commission charging, weak governance over customer structures, poor accounting records, no robust annual review process, non-compliance with internal procedures, unmanaged conflicts of interest, ineffective complaint handling, failure to report suspicions to the MLRO, and inadequate regard for the compliance function.
• Code breaches: These failings amounted to breaches of Principles 2 and 3 of the Codes of Practice for Trust Company Business (highest regard for customer interests, and adequate organisation and risk management).

Remedial action and outcome

• Moore Stephens' remediation: The firm implemented a Restructuring Plan, appointed a new Managing Director, strengthened its compliance function, and carried out a Remediation Plan involving process reviews, staff training and customer file reviews, to be monitored by the Commission.
• Individual directions: Directions under Article 23(1) of the FS(J)L (and equivalent provisions of other regulatory laws) were issued against Mr Barton and Ms Gillen, barring them from performing any function, holding any position, or being employed in the business of any registered person.
• Variance/withdrawal route: The directions against Mr Barton and Ms Gillen remain in force until they successfully apply under Article 23(6) of the FS(J)L for a variance or withdrawal.
• Co-signatory requirement lifted: Because of Moore Stephens' remediation actions, the Commission withdrew its earlier requirement for co-signatories to pre-approve certain transactions.

This is a historical enforcement notice recording findings and actions already taken; it does not impose new ongoing obligations on the wider industry, though it illustrates the standards of governance, due diligence and compliance oversight the JFSC expects of trust company businesses under the Codes of Practice.

Key obligations

• Mr Barton and Ms Gillen are prohibited from performing any function, engaging in any employment, or holding any position in the business of any registered person, unless and until they successfully apply under Article 23(6) of the FS(J)L for variance or withdrawal of the directions.
• Moore Stephens must continue to work with the Commission to complete its Remediation Plan and remedy all deficiencies within agreed timeframes.

Applies to

trust company business, registered persons under the Financial Services (Jersey) Law 1998, individuals holding positions in regulated businesses (Mr Barton, Ms Gillen)