For various infractions, and not for the first time, the Guernsey Financial Services Commission has fined Louvre Fund Services for failing to administer funds properly. It has also banned two directors for several years from finance.

The regulator has fined the firm £77,000. It has fined its directors as follows: Kevin Gilligan £52,500; Charles Tracy £31,500; Derek Baudains £28,000; Julian Lane £14,000. It has banned Gilligan from performing the functions of director, controller, partner or manager of a regulated entity for 6 years and 2 months and Tracy for 3 years and 6 months. It has held them guilty of disobeying its own regulations and the minimum criteria for licensing set out in Schedule 1 Fiduciaries Law and Schedule 4 Protection of Investors (Bailiwick of Guernsey) Law 1987.

The decision notice does not name the funds in question. Louvre's primary regulated activity is the establishment and administration of investment funds. Oben Regulatory Ltd inspected the firm at the regulator's behest in 2017.

Scheme A was a Registered Collective Investment Scheme involving assets (natural resources) located outside Guernsey that were not familiar to Louvre Fund Services. The Louvre directors who sat on its board were not able to show the inspectors satisfactory documentary proof of ownership for the assets of the scheme, the exact location(s) of all of these assets, or satisfactory documentary proof of the exact number of assets that the CIS had acquired. Louvre was therefore unable to value the assets in line with the Principal Documents and Information Particulars.

Scheme B was an Authorised Collective Investment Scheme, one of whose cells held assets that were not familiar to Louvre Fund Services. Louvre's directors sat on its board also. They did not act in accordance with Principal Documents because they were never able to establish the full provenance of these expensive assets.

Companies C and D were designed to generate income through the acquisition of natural products in various foreign countries for onward sale, funded by the issue of loan notes listed on a stock exchange. Two of Louvre's directors sat on both their boards.

Louvre was obliged by an administration agreement to oversee the payment of funds raised through the issuance of loan notes, through companies C and D, to specified overseas companies whose job it was to then acquire assets on C's and D's behalf.

On three occasions, however, Louvre authorised the payments of funds to an overseas company which had no contractual obligations towards either C or D. This contravened Louvre’s contractual and legal obligations. An administration agreement and Principle 6 of Guernsey's Code of Corporate Governance obliged the fund service provider to keep adequate books and records to account for the purchase of assets. The commission, however, found that Louvre failed to obtain adequate documents (i.e. invoices) to confirm the purchase of any assets.

The litany of incompetence does not end there. Louvre also failed to spot and manage conflicts of interest properly. It failed to obtain adequate "client due diligence" (CDD) and "enhanced due diligence" (EDD) in relation to its book of business. It did not always monitor business relationships and transactions adequately. It did not always keep books and records correctly. Its money-laundering controls were inadequate.

The regulator regards most of these failings as 'historic,' the fund service provider having undertaken a self-imposed overhaul.

This is not the first time that Louvre has run afoul of regulators. In 2016 the GFSC fined it and two of its directors (Gilligan and Tracy) £77,000.