Inheritor of Custom House Capital clients fined €220k

Inheritor of Custom House Capital clients fined €220k

By Geoff Percival

A wealth management firm which inherited a number of assets and clients of collapsed investment company Custom House Capital has been fined €220,000 by the Central Bank for regulatory breaches relating to the management of client assets.

Dublin-based BCWM has acted, since 2011, as manager of a portfolio of properties owned by former clients of Custom House Capital, which collapsed after the discovery of the misuse of over €66m of client funds seven years ago.

The liquidator of Custom House Capital, KPMG’s Kieran Wallace, appointed BCWM as manager of these properties, effectively making it the new investment manager to the former clients of Custom House Capital. The new fine relates to all client funds and not necessarily those inherited from Custom House Capital.

However, the Central Bank said it identified failures by BCWM which has admitted to the breaches regarding necessary arrangements for opening client asset accounts.

These breaches included BCWM’s failure to clearly distinguish accounts as ones holding client assets; and a failure to get necessary confirmation letters from banks and custodians when opening client accounts.

“One of the principal objectives of any client asset regime is to ensure there is clear and unambiguous ownership of client assets, which allows for the efficient and cost-effective return of those assets in the event of the insolvency of a regulated firm. While there was no evidence of a loss of client assets in this case, BCWM breached key provisions of the client asset requirements relating to certainty of ownership of client assets,” said the Central Bank’s director of enforcement and anti-money laundering Seana Cunningham.

“In this case, the firm’s non-compliance with fundamental obligations ... could have resulted in a delay in returning clients’ assets in the event of the firm’s insolvency,” she said. BCWM’s is the 188th fine handed out by the Central Bank since 2006, with the combined value over that time amounting to just over €61.7m.

Last year saw over €7.2m in fines with AIB, Bank of Ireland, KBC and Ulster Bank among those fined over €1m each.

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