CACEIS UK censured, to pay £31.7m for weak controls
The Financial Conduct Authority has censured CACEIS UK and secured a £31.7 million payment for WealthTek clients. The asset servicing bank failed to act on information regarding WealthTek's unauthorised activities, exposing clients to financial crime risks.
Failures exposed client assets
CACEIS UK, an asset servicing bank, has been censured by the Financial Conduct Authority (FCA) and will make a £31.7 million voluntary payment to WealthTek clients.
This action follows CACEIS UK's failure to act on crucial information, exposing clients to significant financial crime risks.
The FCA has now secured over £57 million in total for WealthTek clients through actions against CACEIS UK, Sapia Partners, and Barclays Bank UK.
As WealthTek's sub-custodian since November 2020, CACEIS UK was responsible for client asset safety.
On three occasions, CACEIS UK checked the Financial Services Register, which showed WealthTek was not authorised to hold certain client assets, but took insufficient action.
The firm also failed to identify that WealthTek was not permitted to hold client money.
Instead, it opened client accounts for WealthTek and neglected to monitor them properly, failing to promptly review and resolve system alerts.
Cooperation avoids a fine
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, stated that "Strong financial crime controls keep clients' assets safe.
CACEIS UK's failures exposed clients to serious risk.
" She highlighted the firm's extensive cooperation and agreement to a substantial voluntary payment, which led the FCA not to impose a fine.
The £31.7 million payment will be distributed to WealthTek clients with shortfalls, with £30.9 million for administrators and £800,000 for the Financial Services Compensation Scheme (FSCS).
This resolution follows a 13-month investigation.
In related actions, the FCA charged WealthTek's principal partner with criminal offences, including fraud and money laundering, with a trial set for September 2027.
Other firms, Barclays Bank UK PLC and Sapia Partners LLP, also made voluntary payments totalling over £25 million.
Beyond basic checks
The CACEIS UK case highlights the critical need for sub-custodians to move beyond basic checks to proactive client account monitoring.
While the FCA's decision to reward cooperation over a fine offers a pragmatic enforcement model, it also prompts debate on deterrence for significant control failures.
This outcome reaffirms the regulator's focus on client protection and fund recovery, yet exposes ongoing vulnerabilities in asset servicing financial crime frameworks.