Mr Ian Charles Domaille, Mr Ian Geoffrey Clarke and Mrs Margaret Helen Hannis

On 4 June 2026, the Guernsey Financial Services Commission (“the Commission”) decided:

• To impose a financial penalty of £125,000 under section 39 of the Enforcement Powers Law on Mr Domaille.
• To impose a financial penalty of £40,000 under section 39 of the Enforcement Powers Law on Mr Clarke.
• To impose a financial penalty of £22,500 under section 39 of the Enforcement Powers Law on Mrs Hannis.
• To make this public statement under section 38 of the Enforcement Powers Law.

The financial penalties issued in this case were imposed under Section 39 of the Enforcement Powers Law in accordance with The Financial Services Commission (Bailiwick of Guernsey) (Amendment) Law, 2016, which increased the maximum level of financial penalties available to the Commission.

The Commission considered it reasonable and necessary to make these decisions having concluded that the Individuals failed to ensure compliance with the regulatory requirements and failed to meet the Minimum Criteria for Licensing (“the MCL”) pursuant to Schedule 1 of the Fiduciaries Law.

BACKGROUND

Mr Domaille has been the majority shareholder of a licensed Guernsey company (“the Licensee”) during the period under review. He was a director from incorporation until June 2019 at which point, he became managing director and has remained in this role.

Mr Clarke was an associate director of the Licensee from January 2011 until November 2015 when he became a director. He ceased to be a director in October 2022.

Mrs Hannis was a manager of the Licensee from March 2011 to November 2016, and again from June 2022 to date, an associate director from December 2016 to June 2019 and a director from June 2019 June to June 2022.

The Licensee is a licensed fiduciary company and its primary business is the establishment and administration of trust and corporate structures. Through its secondary licensees, the Licensee provides directorship, trustee, administration, secretarial and nominee shareholder services.

FINDINGS

The Commission’s investigation commenced following a full risk assessment of the Licensee conducted in December 2018. This full risk assessment found that, amongst other matters:

• the Licensee failed to take adequate steps to establish the identity of beneficial owners of client companies or the source of funds;
• the Licensee failed to identify, manage and mitigate conflicts of interest; and
• there were a significant amount of outstanding action points arising from its periodic file reviews (a repeat failing from a full risk assessment conducted in 2016.)

The most significant failings found in the course of the Commission’s investigation arose from failure by the Individuals to ensure that the Licensee complied with the Regulations, the rules of the Handbook (“the Rules”), the Code of CG and the TSP Code.

Brief examples of some of the failings are set out below.

Failure to ensure that the Licensee carried out ongoing monitoring of clients

Regulation 11 details the requirements to perform ongoing and effective monitoring of existing business relationships, including scrutiny of any transactions or other activity. Regulation 5 also details that for high-risk clients there must be more frequent and more extensive monitoring.

Example 1

In 2002, the Licensee established a business relationship with Mr A, a national of Country A. Throughout the business relationship, Country A remained a high-risk country known for its high levels of bribery and corruption. Mr A was involved in high-risk business activities often working with the government of Country A.

The Licensee acted as Trustee for Trust 1 which was settled by Mr A and as directors and secretary of companies held under Trust 1.

From the inception of the relationship substantial monies were transferred to the Licensee as trustee through money exchange companies which made the source of the funds difficult to establish despite substantial amounts also being transferred through banks in respect of which the source of funds was more readily established. The Licensee failed to take reasonable steps to ascertain a credible explanation for the use of money exchange companies or to take reasonable steps to establish the source of funds paid through the money exchange companies.

Following the death of the leader of Country A, Mr A requested the Licensee change the name of Trust 1 and to replace him as a beneficiary of the trust with a family member. Mr Domaille noted that Mr A would still be shown as the settlor and the trust would always have a history of being named “Trust 1”. To achieve the closest result to Mr A’s wishes, Mr Domaille suggested to Mr A the setting up of a new trust by a declaration of trust (“Trust 2”), which would achieve the following:

• Mr A would not be named as settlor;
• the beneficiaries could be named as a class and exclude Mr A;
• there would be no link to Trust 1; and
• the new trust could be called anything.

Mr A also wanted the name of an associated foreign company changed. The explanation given by Mr A to Mr Domaille was that he wished to protect the trust assets from illegitimate claims. These changes were all effected for Mr A by Mr Domaille. As the Licensee was aware that it had not established the source of funds transferred through the money exchange companies the Licensee should have considered terminating the relationship with Mr A rather than implementing the request.

The Licensee was later informed that Mr A had a brother who worked for a government organisation in Country A which had entered into contracts with Mr A’s businesses. The Licensee was informed that Mr A’s brother and a group of foreign companies he used were being investigated and had been accused of misappropriating funds from the government of Country A. This government organisation had previously been (but was not then currently) the subject of EU sanctions, enforceable in Guernsey, due to being an entity acting on behalf of the leader of Country A. Mr A was concerned that he might be subject to investigation. According to a file note of a conversation between Mrs Hannis and Mr A’s adviser, Mr A and his brother were confident that the investigation would be closed. However, the Licensee and Mrs Hannis took this explanation at face value and took no further steps to verify the relevant details.

The Licensee became aware of adverse media regarding Mr A and his brother, including that the government organisation with which Mr A’s brother was associated was alleged to have given contracts to companies related to Mr A.

Shortly after the adverse media began to appear, Mr A contacted the Licensee from an unknown email address, informing them of a change of email address and requested distributions to be made from Trust 2 to bank accounts in another high-risk jurisdiction. Over the next few months, a significant proportion of Trust 2’s assets were transferred to bank accounts in another high-risk jurisdiction in the name of Mr A who had, as described above, been removed as a beneficiary of the trust. The distributions were allegedly for and on behalf of Mr A’s wife (named as the beneficiary) who apparently did not have a bank account.

The Licensee effected the transfer of monies putting the funds out of its control despite the fact that it had not ascertained the source of funds and in spite of is knowledge of the matters described above. Mr A’s wife subsequently gave her consent to the distributions.

In addition, the payment of funds from Trust 2 to Mr A, who was no longer a beneficiary, without any rationale demonstrates that the Licensee was not treating the interests of the beneficiaries as paramount, as required by paragraph 4 of the TSP Code.

The Licensee did not have a complete and clear understanding of Mr A and the business relationship from the beginning. At all material times, Mr Domaille and Mrs Hannis were responsible for the relationship between Mr A, the Trust and the Licensee.

Example 2

The Licensee established a business relationship with Company 1, a foreign registered company, in 2006, which at the time was ultimately owned by Mr B. Mr B was a high-net worth individual from a high-risk country and was also a politically exposed person (“PEP”). Company 1’s function was to hold a property. The Licensee initially rated Company 1 as high-risk.

Between 2006 and 2013, the legal ownership of Company 1 changed from Mr B to Mrs C, a family member of Mr B. The Licensee was unaware of the change in ownership until 2013 and was unaware of when the change took place or the rationale behind the change.

In 2016, the Licensee was made aware that the ownership structure had changed again in 2014. Ownership of Company 1 was split between 11 people/foundations/funds, with 80.2% of the shareholding being held in declarations of trust in favour of Mrs C. Some of the additional people/foundations/funds that became shareholders were related to Mr B, and one of them was a PEP. Mr B, via various vehicles, indirectly held a significant shareholding of Company 1, and this framework could be considered as a way of disguising Mr B’s position.

In early 2018, Mr B was subject to U.S. sanctions, however, no action was taken by the Licensee despite knowledge of the sanctions. Later in 2018, the Licensee became aware of adverse media which reported that Mr B had made Mrs C the ostensible owner of a multitude of other companies and assets that had belonged to him. This adverse media suggested that these changes of ownership might have been an attempt by Mr B to hide his assets in the light of stricter sanctions, however, Mr Domaille and Mrs Hannis did not ensure that the Licensee took steps to ascertain the reason for the ostensible change in ownership, whether the ostensible owner was in truth the beneficial owner and as a result failed to act with the appropriate professional skill and soundness of judgement in accordance with requirements of the MCL.

The Licensee also failed to appropriately monitor and record a loan that Company 1 had received. In or around 2008, Company 1 received a loan from an associated company, however, the Licensee did not have the corresponding loan agreement. In 2018, the Licensee contacted a representative of the associated company in an attempt to determine the rationale behind this loan and also requested a copy of the agreement. The Licensee was informed that the purpose of the loan was to fund the cost of maintaining the property but repayment had been waived in 2017, and it was not provided with a copy of the agreement. For 10 years, the Licensee failed to monitor this transaction and have the necessary documentation, oversight and understanding of it as required by the Handbook. Mr Domaille and Mrs Hannis should have ensured that the Licensee took steps to understand the provenance of the funds and in failing to do so failed to act with the appropriate professional skill and soundness of judgement in accordance with requirements of the MCL.

Failure to ensure that the licensee complied with Regulation 11 and the TSP Code

Example 3

The Licensee was the trustee of a Charitable Trust. The purpose of this entity was to promote the education, health, cultural and spiritual development of communities in Africa, India and Europe. Donations were made by the trustees on a recommendation from Mr D, the settlor of the Charitable Trust.

In 2017, the Licensee contacted an individual (who was not a beneficiary of the Charitable Trust) about a donation to be made towards a school project. However, before payment was made, Mr D interjected and corrected the Licensee that the payment was in fact a birthday gift to the individual, a friend of Mr D. The Licensee continued and made the payment despite the fact that it was made to a non-beneficiary outside the purpose of the Charitable Trust. The Licensee and Mr Clarke failed to effectively scrutinise the risks of facilitating payment in this way.

In another instance, the Charitable Trust paid the university fees of an individual whose father was a senior manager in a natural resource company part owned by Mr D. The individual’s father was also the Vice-Chairman of a subsidiary of the natural resource company which operated a mine in a high-risk country. The mine was part-owned by the government of that country.

Mr Clarke identified that the direct payment of university fees could be considered disguised remuneration to the father of this individual and a breach of the trust deed. However, Mr Clarke then suggested an alternative method of paying the university fees to Mr D personally who could settle the fees himself.

In addition, the payment of funds from Charitable Trust outside of the provisions of the trust deed demonstrates that Mr Clarke was not treating the interests of the beneficiaries as paramount, as required by paragraph 4 of the TSP Code.

Mr Clarke should have ensured that the Licensee complied with Regulation 11 and paragraph 4 of the TSP Code and demonstrated a lack of soundness of judgement and professional skill and thereby failed to meet the requirements of the MCL.

A failure to procure that the Licensee took reasonable measures to establish source of funds and source of wealth for high-risk customers

Regulation 5(1) and 11 and paragraph 5 of Schedule 3 to the Proceeds of Crime Law require a financial services business to carry out enhanced customer due diligence (“EDD”) where the customer, beneficial owner or underlying principal is a PEP or where a business relationship that has been assessed as high-risk. EDD includes taking reasonable measures to establish the source of any funds and of the wealth of the customer and beneficial owner and underlying principal.

Example 4

The Licensee provided director, administration, secretarial and nominee services for a Guernsey registered company, Company 2, which was owned by Mr E, a PEP in Country B. Between 2006 and 2007, Company 2 received substantial loans in the period 2007 to 2008 from a foreign registered entity with which the Licensee had no business relationship. The Licensee has confirmed that at the time of receiving these loans it had not ascertained the ultimate beneficial owner, the source of funds or the source of wealth in relation to these loans.

When the Licensee contacted the administrator of the foreign entity in 2018 (some 11 years after the receipt of the funds) to establish the source of the funds for the loans, the Licensee was told that the owner could have changed several times and that the administrator had no information on where the money had come from.

The Licensee contacted the administrator of the foreign entity again in 2021 and was told the source of funds was an employee of the administrator and that the funds came from an investment in an entity which was involved in providing infrastructure projects in Country B. The administrator eventually confirmed that the funds loaned to Company 2 originated from Mr E.

The Licensee has since discovered that Mr E was a director of the infrastructure company, that had been the subject of a number of investigations, including allegations of bribery and corruption, thereby creating the potential that the source of the loans was linked to the proceeds of crime.

In relation to Company 2, Mr Domaille acted with a lack of competence and professional skill and thus failed to meet the MCL in not ensuring that the Licensee complied with Regulations 5 and 11.

A failure to ensure that the Licensee regularly reviewed its customer risk assessments and ensure all relevant risk factors were considered

Paragraph 3(4)(b) of Schedule 3 to the Proceeds of Crime Law (and previously Regulation 3(2)(b)), requires a financial services business to regularly review, and where necessary update, its customer risk assessments. Rule 55 of the Handbook requires a financial services business to ensure that all relevant risk factors are considered before determining the overall assessed risk.

Example 5

The Licensee’s policy for conducting periodic reviews on its clients was as follows:

• for high activity high-risk clients to be reviewed annually;
• lower activity high-risk clients every other year; and
• standard risk clients every three to five years.

During the period March 2014 and September 2019, there was a constant backlog of periodic reviews relating to a significant proportion of the Licensee’s clients. As a result, the Licensee was in breach of Regulations 3, 11 and 15. Mr Domaille and Mr Clarke were directors of the Licensee during the period referred to above and acted with a lack of competence and professional skill and so failed to meet the MCL in failing to procure that the Licensee carried out reviews in accordance with the Regulations and the Licensee’s policy.

Example 6

With regards to Mr B and Company 1 (see Example 2), the Licensee had initially rated this relationship as high-risk.

The risk assessment for Company 1 was reviewed in 2016 and the Licensee re-classified it from high-risk to standard risk due to Mrs C being recognised by the Licensee as the ultimate beneficial owner, and a person who was not considered a PEP or PEP by association to Mr B. However, the Licensee failed to consider a number of risk indicators, as required by Rule 55 of the Handbook:

• the Licensee was not informed of the change in ownership from Mr B to Mrs C (between 2006 and 2013);
• the potential that the new ownership structure obfuscated the true ownership by Mr B; and
• the fact that the business relationship was still associated with Mr B, who was still considered a PEP.

There was a failure by Mr Domaille and Mrs Hannis to procure the Licensee to review this risk assessment when it became aware of the second change of ownership. This failure resulted in the structure remaining classified as standard risk notwithstanding that there was an additional PEP and an additional ownership layer in the structure.

Company 1 remained rated as standard risk until late 2018 when the Licensee re-classified it as high-risk again, having identified that there were more PEPs involved. However, this was six months after Mr B had been sanctioned by the U.S. and three months after the adverse media surrounding Mr B and Mrs C was published, which the Licensee was aware of but did not give due consideration as to how this affected the risks associated with Company 1. Mr Domaille and Mrs Hannis acted with a lack of professional skill and soundness of judgement in breach of the MCL in not procuring the Licensee to take more steps to consider the appropriate risk category applying to Company 1.

A failure to procure that the Licensee took measures to understand the ownership and control of customers

Regulation 4(1) (subsequently paragraph 4 of Schedule 3 to the Proceeds of Crime Law) required a financial services business to ensure that the steps outlined in Regulation 4(3) were carried out. Regulation 4(3)(c) required a financial services business to take measures to understand the ownership and control structure of customers.

Example 7

As noted above (see Example 2), the beneficial ownership of Company 1 changed from Mr B to Mrs C sometime between 2006 and 2013, without the Licensee’s knowledge. Even though the Licensee became aware of the change in ownership in 2013, there was no documentation on the file that explained the rationale or the date of the change.

The Licensee should have taken steps to understand the ownership and control of Company 1, however, the Licensee failed to take measures to understand or consider whether Mr B continued to be the true ultimate beneficial owner of Company 1 given the risk factors outlined above. Mr Domaille and Mrs Hannis acted with a lack of professional skill and soundness of judgement in breach of the MCL in not procuring the Licensee to take more steps to ascertain the beneficial ownership of Company 1.

Mr Domaille and Mr Clarke failed to manage or minimise conflicts of interest

Paragraph 3.2 of the Code of CG states that Directors have a duty to avoid, manage or minimise conflicts of interest and should, wherever possible, arrange their personal and business affairs so as to avoid direct and indirect conflicts of interest.

Example 8

The Licensee provided administration services to Company 3, a Guernsey registered company, involved in natural resource extraction in a high-risk country. Mr D founded this company and another director of the Licensee (Director A) was a director and shareholder of it in his personal capacity.

Mr D gifted shares in Company 3 to Director A, Mr Clarke, and also to a Trust Administrator at the Licensee, conditional on a successful initial public offering on a recognised Stock Exchange. These gifts were described in the Licensee’s gift register as gifts to family and friends which failed to acknowledge that the recipients were, as a result of the gifts, in a position of conflict. Following the subsequent initial public offering, the shares held by Director A, Mr Clarke, and the Trust Administrator were worth a significant sum of money.

According to the Licensee’s policy applicable at the time: (i) staff should not accept any gift if it is likely to conflict in any material way or was likely to induce someone to breach a duty,

(ii) any gifts of cash or cash equivalent required the prior written approval of the Compliance Manager, and (iii) any gift over £500 required the prior approval of the Managing Director. The Commission saw no evidence of prior written approval by the Compliance Manager in relation to the gift of shares. Mr Clarke’s and the Trust Administrator’s shares were approved by Director A, the Managing Director.

The receipt of such significant gifts was in breach of the Licensee’s own policy and created a risk that Mr D could influence Director A, Mr Clarke and the Trust Administrator. However, the risks associated with this potential conflict of interest were only partially identified by the Licensee after the gifted shares had been transferred and thus were not effectively managed or minimised at the appropriate time. Mr Clarke and the Trust Administrator returned the shares to Mr D some three years later in the light of the apparent conflicts in the course of the investigation by the Commission.

The Licensee failed to have effective suitable oversight of the management and control of the potential risk of Director A, Mr Clarke and the Trust Administrator committing an offence under The Prevention of Corruption (Bailiwick of Guernsey) Law, 2003, as required by Principle 5 of the Code of CG.

Mr Domaille and Mr Clarke acted with a lack of professional skill and soundness of judgement and so failed to meet the MCL in failing to ensure that the Licensee had appropriate procedures in place to deal with the acceptance of shares.

Mr Clarke failed to ensure that the Licensee had adequate controls to manage risk

Paragraph 4.4 of the Code of CG states that a company should maintain a sound system of internal control to safeguard the company’s assets and to manage risk, and the Board should regularly review such controls.

Example 9

The Licensee provided director and administration services to Company 4 which was another company linked to Mr D. Company 4 is a Guernsey company which had two foreign subsidiaries involved in building data centres for the purpose of being rented out for mining cryptocurrency.

Company 4 entered into an agreement with a third-party investor in which it was agreed to receive an investment subscription by way of Bitcoin. At the time in question, the Licensee understood that Company 4’s bank had a policy of not accepting funds derived from cryptocurrencies. Despite this, Company 4’s bank account received three tranches of investment from a company that was involved in over-the-counter trading of cryptocurrencies in respect of the third-party’s investment by way of Bitcoin.

Mr Clarke should have ensured that the Licensee had adequate controls in place to monitor and manage the risk that funds received might be derived from cryptocurrency.

Mr Domaille

The Commission’s investigation identified that Mr Domaille failed to demonstrate that he acted with competence, soundness of judgement and professional skill in accordance with the minimum criteria for licensing.

For example, Mr Domaille:

• was the overseeing client director of Mr B and failed to consider all the risk factors involved in the client relationship and approved it being re-classified as standard risk, despite Company 1 being linked to a PEP;
• failed to avoid, manage or minimise conflicts of interest, in particular in relation to Company 3; and
• as a controlling director of the Licensee, failed to ensure its compliance with the Regulations and Handbook.

Mr Clarke

The Commission’s investigation identified that Mr Clarke failed to demonstrate that he acted with soundness of judgement and professional skill in accordance with the minimum criteria for licensing.

For example, Mr Clarke:

• failed to ensure that the Licensee had effective controls in place to ensure that it did not breach what it considered at the time the policy of Company 4’s bank of not accepting funds derived from cryptocurrencies;
• provided the means to Mr D to make a payment from the Charitable Trust after having identified that this could be characterised as disguised remuneration;
• failed to avoid, manage or minimise conflicts of interest, in particular in relation to Company 3; and
• as a director of the Licensee, failed to ensure its compliance with the Regulations and Handbook.

Mrs Hannis

The Commission’s investigation identified that Mrs Hannis failed to demonstrate that she acted with, soundness of judgement and professional skill. The Commission concludes that Mrs Hannis is not a fit and proper person due to her actions.

For example, Mrs Hannis:

• was the responsible manager for the entities related to Mr B and failed to identify to assess the risks adequately; and
• did not manage the situation in an effective way.

Mitigating Factors

Following an on-site visit to the Licensee by the Commission in 2018 , the Licensee completed a risk mitigation programme under the guidance and instigation of Mr Domaille. This included appointing a third-party to review the effectiveness of its new procedures.

Mr Domaille and Mr Clarke procured the appointment of four additional directors, including creating a new role of a Chief Executive Officer and appointed a person who is independent of the ownership of the Licensee in that role. The Licensee also appointed a non-executive director, a role which the Licensee previously did not have. The Licensee has also expanded its compliance resources, including hiring a separate MLRO and MLCO.