Business ‘exposed island to risk of financial crime’

The penalties were imposed on Safehaven International Ltd by the Guernsey Financial Services Commission.

Safehaven is a licensed fiduciary company which enables high net worth individuals to create companies to own and manage aircraft and luxury yachts.

‘The firm provides directors to run these companies and administers the companies through which high value assets are brought, managed and sold; bank accounts and credit cards are operated and sizeable sums of money are moved.’

The GFSC said it considered Safehaven’s services as ‘inherently high risk’.

The penalties were imposed following a GFSC review which started with an on-site visit to the firm in October, 2016.

After this the commission reviewed 13 client files, as well as other material: ‘Of the 13 files reviewed, breaches of the Regulations and Rules were identified in at least nine, equating to a 70% failure rate,’ it said.

‘The licensee’s failings exposed the Bailiwick to the risk of financial crime. In two of the client files reviewed there is a high possibility that structures administered by the licensee may have been used for transactions involving the proceeds of crime, which is a matter which jeopardises the reputation of the Bailiwick as an international finance centre.’

‘The nature of the licensee’s services make it vulnerable to be used to facilitate the laundering of the proceeds of crime.’

One example of the problems found were linked to a company set up and administered by Safehaven in 2009 to buy a £7m. motor yacht to run as a charter vessel.

It was sold in 2015 for approximately £3.7m., having been advertised originally at £6.9m.

The funds from this sale were paid into the customer’s personal bank account.

Later in 2015, the Safehaven was informed that the client had purchased a high value luxury asset for approximately £1.4m. The funds were reported to have come partly from the sale of the charter vessel.

They set up a holding company for this luxury asset.

‘The licensee became aware in August 2016 of media reports detailing that the client had been arrested in another jurisdiction for a multi-million pound fraud, reportedly linked to organised crime. The news report detailed that as a result of the fraud the customer had opened up a web of bank accounts and money from these accounts was linked to, among other things, the purchase of luxury vessels.

‘In 2018, the customer was sentenced to eight years imprisonment and fined 20 million euros for the above fraud. A media report at the time detailed the client’s ownership of the charter vessel and specifically named Guernsey as one of the locations where the customer’s bank accounts were held.’

The GFSC said that throughout the relationship there were risk indicators which were not followed up or investigated.

The penalties

Safehaven was fined £100,000 while managing director Richard Bach was fined £50,000; directors Michael Good and David Whitworth, £10,000 each, former director Stephen Dickinson, £1,000 and money laundering reporting officer Tracy Ozanne, £5,000.

In addition, Mr Bach is prohibited from ‘performing the functions of controller, director, partner, manager, money laundering reporting officer, money laundering compliance officer and compliance officer of a regulated entity’ for six years.

Miss Ozanne, who was the company’s compliance officer from May, 2014 to June, 2017, is similarly barred from being a money laundering reporting officer, money laundering compliance officer or compliance officer for six years.

The GFSC report said that Miss Ozanne was appointed MLRO and compliance officer with no previous experience: ‘The Commission’s investigation identified that Miss Ozanne was not a fit and proper person to be a Money Laundering Reporting Officer of a licensed fiduciary.’

Of Mr Bach, the commission said: ‘[His] leadership has been characterised by a failure to accord sufficient priority to matters of compliance and a failure to ensure that compliance failings were remediated in an effective manner.’

It found that Mr Good, Mr Whitworth and Mr Dickinson ‘failed to demonstrate that [they] acted with diligence, including failing to give sufficient priority to compliance issues and failed to grasp the severity of the situation the Licensee was in between 2014-2016’.

The report concludes by saying that since compliance failings were identified in 2014, efforts were made to deal with them: ‘ At all times the licensee, the directors and the MLRO co-operated with the Commission during the investigation.’