Guernsey’s financial watchdog has imposed a significant fine, after finding that ITI Trade Ltd and its director failed significantly in their regulatory duties.

The Guernsey Financial Services Commission (GFSC) made their findings against the business and Mr Alex Phil (formerly Mr Alexei Filatov) last week.

The GFSC found failings in Customer Due Diligence (CDD), in that the firm failed to properly identify and verify customers, especially high-risk ones, with a third of accounts found deficient.

The GFSC also found that ITI Trade Ltd did not consistently identify Politically Exposed Persons, (PEPs), and there were flaws with their Transaction Monitoring – there was no evidence of ongoing monitoring of customer transactions, even during a 440% increase in assets under management in early 2022.

They concluded that the firm lacked adequate anti-money laundering and counter-financing of terrorism policies, procedures, and risk assessments, and that the Board failed in its oversight of outsourced functions and overall management within Guernsey.

Lastly, they found that as a director and Money Laundering Reporting Officer, Mr Phil misled the GFSC by submitting an altered report and failed to address known deficiencies.

The GFSC commented on these failings, stating: “A significant proportion of the Firm’s customers, due to their geographical location and that of their source of funds, posed a high-risk of money-laundering.”

The spokesperson continued: “With such a high level of risk it was imperative that the Firm had effective and appropriate policies, procedures and controls to manage and mitigate these risks; the Firm did not have such controls in place.”

The GFSC described these as serious and ongoing breaches, especially given the high-risk nature of many customers. While the firm had opportunities to fix issues, they largely failed. 

Although mitigating factors included the firm voluntarily surrendering its licence and reaching an early settlement.

As a result of the findings, the GFSC imposed a £175,000 fine on ITI Trade Ltd and a £35,000 fine on Mr Alex Phil.

The firm has ceased trading, and administration managers were appointed by the Royal Court. Read more about the case HERE.