On March 12th, the United Kingdom’s Financial Conduct Authority (FCA) announced it had placed a number of restrictions on Dolfin Financial, a large Wealth Management firm that, among other services, manages UK Tier 1 Investor Visa-qualifying investments for clients. The FCA’s move came as a result of “concerns about the way it conducts its business.”
The FCA had originally placed a number of voluntary restrictions on the firm’s activities more than a year ago following allegations it had channeled UK Tier 1 client money into the corporate bonds of firms directly related to some of Dolfin’s directors, constituting a potential conflict of interest.
At the time, Dolfin issued a statement widely considered an acknowledgment that it had been involved in such activities, in which it said it would “cease to be involved in structuring, promoting, issuing, or distributing bonds and loan notes issued by companies in which Dolfin or its directors have an interest.” The firm, according to CityWire, confirmed that it had formerly offered “restricted bonds” as part of the investor visa service but that it would no longer do so.
In the months leading up to the FCA’s imposition of restrictions on December 24th, 2019, more than a dozen key employees, including its former Head of Compliance and its CIO, had left the firm.
Despite working with regulators to rectify shortcomings in its business conduct for more than a year, Dolfin was this week handed further, more comprehensive restrictions that will directly affect its core business.
“The restrictions,” said the FCA’s announcement, “will stop Dolfin from carrying on any regulated activity and prevent it from reducing the value of its assets, or any of the client money or custody assets it holds, without the consent of the FCA. A full description of the restrictions on the firm can be found on the FCA Register.”
“A number of serious concerns”
Explaining why it had imposed further restrictions, the FCA said it had “identified a number of serious concerns around the way that Dolfin operates its business, including the firm’s Tier 1 investor visa business activities and financial crime controls.”
While Dolfin had worked with the FCA to take “steps to try and address these concerns” and to commission a “Skilled Persons Review”, the regulator said that, “following the conclusion of the Skilled Persons Review and developments that have taken place since, the FCA has determined that it is appropriate in the interests of protecting the integrity of the UK financial system to stop the firm from carrying out regulated activities and has imposed these restrictions.”
The FCA also said that those who currently have funds placed with Dolfin would “not be able to trade, withdraw, transfer, or otherwise use your custody assets or client monies held by Dolfin while the restrictions are in place, without the consent of the FCA.” By the same token, clients may not add funds to their Dolfin accounts while restrictions are in place.
The regulator could not say how long such restrictions would remain in place as this would depend on the firm’s ability to satisfactorily address the FCA concerns.