ITI Trade, incorporated in Guernsey in 2014, had primarily Russian clients. It was sanctioned following a lengthy investigation into what the GFSC described as ‘widespread and systemic’ failings in anti-money laundering controls and corporate governance at the firm.
The commission has also fined the firm’s former director Alex Phil, formerly known as Alexei Filatov, £35,000, as well as banning him from holding any supervised role in Guernsey’s finance sector for almost three years.
It had shut the business down in the summer of 2022, applying to the Royal Court for an administration management order to be imposed, shortly after the company saw a huge influx of business following the Russian invasion of Ukraine.
ITI Trade specialised in execution only and prime brokerage services for high net worth and institutional clients, many from higher‑risk jurisdictions.
Almost all of its functions, including on-boarding, client monitoring and trading infrastructure, were conducted by an affiliate company in Russia, where the standards for customer due diligence and sanctions screening were less strict than those in Guernsey.
The commission found that the company had little knowledge of its customers or their source of wealth, and failed to demonstrate that it had effective oversight of its outsourced service providers in order to mitigate the risks that were present in its business model.
This led to breaches of the Bailiwick’s regulatory requirements, which the commission said arose at all stages of the customer relationship, from on-boarding to day-to-day management and monitoring.
‘The failings are particularly concerning due to the large proportion of high-risk customers, the source of funds and wealth of which was unknown to the licensee,’ the commission said.
At one point, more than 75% of ITI Trade’s assets under management were held on behalf of 108 unknown individuals through its Russian sister company.
The firm’s licence was suspended in July 2022 and administrators were appointed by the Royal Court shortly afterwards.
While ITI Trade voluntarily surrendered its licence, the GFSC said repeated opportunities to fix compliance issues had been missed.
The commission said the scale of the failings justified a public statement and significant penalties.
‘The findings demonstrate the importance of robust oversight, even where services are outsourced overseas,’ it said.
The States has rigorously imposed UK sanctions, freezing assets of Russian individuals and corporates imposed since the start of the war in Ukraine in a bid to shut off funding for the conflict.
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