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LeapRate Exclusive… LeapRate has learned via regulatory filings that FCA regulated Goldenway Global Investments (UK) Limited, which operates the GWFX Global retail FX and CFD brokerage brand (at gwfxglobal.com), has added Simon Henry as its new Compliance Officer.
Simon Henry was hired by GWFX from London Capital Group Holdings plc (LON:LCG), where he was Head of Compliance for the past year. Before joining LCG in 2016, Mr. Henry had previously filled similar roles for LMAX Exchange, ETX Capital, and for the UK arm of Gain Capital Holdings Inc (NYSE:GCAP).
The move comes after GWFX had its previous candidate for Compliance Officer, Greg Nathan, rejected by the FCA. The FCA issued last week a Final Notice on the application of GWFX to have Mr. Nathan approved as the compliance officer for the company, stating the it “is not satisfied that Mr Nathan is a fit and proper person to perform the CF10 and CF11 controlled functions to which the Application relates.”
The FCA went on to state:
Mr Nathan failed to demonstrate a detailed knowledge and understanding of the implications of the Firm’s operating model, the money laundering and financial crime risks faced by the Firm and the processes that need to be put in place at the Firm satisfactorily to address those risks. Specifically, it was Mr Nathan’s failure to satisfy the Authority that he could proactively identify and manage the relevant risks in performing the Refused Controlled Functions which caused the Authority to have concerns about Mr Nathan’s competence and capability to perform the Refused Controlled Functions.
Furthermore, Mr Nathan did not convey an adequate understanding of the difficulties in assessing the appropriateness of transactions for customers inherent in the Firm’s business model, including a sufficient understanding of the risks arising from the Firm’s ICAAP.
Mr. Nathan attended two interviews conducted by the FCA on September 21, 2016 and November 22, 2016. The two interview panels, both comprising the relevant specialists required to assess Mr. Nathan’s competence, unanimously considered that Mr. Nathan had not met the FCA’s competence requirements expected of an individual performing the Compliance CF10 and CF11 functions at the firm. Each interview panel was comprised of different individuals.
The interview panels’ overarching criticism was that Mr. Nathan failed to provide sufficiently detailed responses to the interview questions in relation to the compliance and AML responsibilities that he wished to assume within the firm.
For example, during the .second of the interviews, Mr Nathan had characterized the firm’s business model as “very, very simple”, which the FCA considers a demonstration that Mr. Nathan failed to recognize the complex nature of the CFD products offered by the firm to retail clients and the complexities arising from the composition of the firm’s client base, the reliance on other parties, the concern over managing the risk of offering inappropriate products to clients and the implications of the firm’s being authorized in a different jurisdiction to the majority of its client base.
Also, Mr. Nathan did not show sufficient in-depth knowledge and understanding regarding the third party provider which operated the database tasked with confirming the authenticity of Chinese National Identity Cards, which was a key step in the client on-boarding process; nor was he sufficiently familiar with how the confirmation process worked.
Mr. Nathan is no longer employed by GWFX.
GWFX is controlled by investors in China, and a majority of the firm’s clients are Chinese nationals, based in China. Many of the firm’s activities are undertaken in Hong Kong by related entities. These activities include customer verification AML checks, back office functions, and maintenance of the web platform through which the firm’s customers trade.
GWFX brought in Revenues of £1.1 million in 2016, up 8% from the previous year, and earned a net profit of £462,000.