CBI Enforcement Action: Co-mingled Client and Own Funds December 2019BVP Investments Limited fined just €6,000 and reprimanded by the Central Bank of Ireland for holding client assets in breach of its authorisation, is a low impact firm under the Central Bank’s Probability Risk and Impact System of supervision (PRISM).
BVP’s audited accounts for year ended 31 December 2018 show a turnover of €745,490. This is a reminder to all low impact firms that the Central Bank has no qualms about issuing fines to small scale firms, proportionate to the firm’s bottom line.
The Firm was authorised under the Investment Intermediaries Act, 1995 (the IIA) on 15 November 2007. Under its IIA authorisation, the Firm is authorised to provide services to ‘’Designated Investment Funds’’. The Firm is explicitly not permitted by the Central Bank to hold client assets.
BVP’s authorisation contains an explicit condition stating that it is not permitted to hold client money or investment instruments. Immediately after obtaining its authorisation in 2007, and with full knowledge of the condition, BVP began holding and processing client funds through its corporate bank accounts.
As a consequence of the Firm’s breach, significant amounts of client funds were co-mingled with the Firm’s own funds in the Firm’s corporate bank accounts. Although the investigation found no evidence of misappropriation or loss of client assets by the Firm, their actions placed these client assets at risk of loss, particularly in the event of an insolvency; misuse (inadvertent or otherwise) by the Firm; and delay in identification in their return to clients.
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By Judy de Castro - Regulatory Consultant