Custody Failures Trigger Fresh FCA Warning on FinCrime Resilience

Britain's financial watchdog has intensified its campaign to strengthen financial crime controls across the financial services sector after securing a £31.7 million voluntary payment from CACEIS UK for failures linked to the collapse of wealth manager WealthTek.

The Financial Conduct Authority (FCA) publicly censured the Credit Agricole-owned asset servicing bank after concluding it failed to act on warning signs that exposed WealthTek clients to the risk of financial crime.

The payment brings the total compensation secured by the regulator for affected clients to more than £57 million following a series of enforcement actions connected to the firm's collapse in 2023.

Rather than imposing a financial penalty, the FCA accepted the voluntary payment, citing CACEIS UK's extensive cooperation throughout a 13-month investigation.

The funds will be distributed to WealthTek customers who have not yet recovered the full value of their investments.

Therese Chambers, the FCA's joint executive director of enforcement and market oversight, said the case demonstrated the importance of effective financial crime controls throughout the financial services ecosystem.

"Strong financial crime controls keep clients' assets safe," Chambers said. "CACEIS UK's failures exposed clients to serious risk."

She added that the firm had "done the right thing" by cooperating fully with the investigation and agreeing to make a substantial voluntary payment, leading the regulator not to impose a separate financial penalty.

According to the FCA, CACEIS UK became WealthTek's sub-custodian in November 2020, assuming responsibility for safeguarding client assets.

During that relationship, the bank checked the Financial Services Register on three separate occasions and identified that WealthTek lacked authorization to hold certain client assets.

Investigators found that the firm failed to take appropriate action despite those warning signs.

The regulator also concluded that CACEIS UK failed to recognize that WealthTek was not permitted to hold client money before opening client accounts on its behalf. Once those accounts had been established, the bank did not adequately monitor them or promptly investigate alerts generated by its own internal systems.

CACEIS UK said it remains committed to fraud prevention and fair treatment of customers. The bank said it had reviewed its internal procedures and noted that the FCA had not required any additional remediation program following the investigation.

The enforcement action forms part of a broader regulatory response following WealthTek's collapse.

Last year the FCA fined Barclays Bank UK more than £3 million for weaknesses in its handling of financial crime risks relating to a client money account opened for WealthTek.

Barclays also agreed to make a voluntary payment exceeding £6 million to compensate affected clients.

Earlier this year, Sapia Partners agreed to contribute almost £19.7 million after the regulator censured the firm for inadequate safeguards while WealthTek operated as its appointed representative.

Together, the three cases have enabled the FCA to secure more than £57 million for investors who suffered losses following the firm's failure.

The wider WealthTek investigation remains one of the FCA's most significant financial crime cases in recent years.

Former principal partner John Dance was charged in 2024 with multiple criminal offences, including fraud and money laundering. He has pleaded not guilty, with a criminal trial scheduled for 2027.

Prosecutors allege client funds were misused over an extended period before the firm's collapse.

The regulator has increasingly emphasized that firms responsible for safeguarding client assets must do more than simply identify potential compliance issues.

They are expected to investigate warning signs promptly, challenge inconsistencies and escalate concerns before customers are exposed to harm.

The CACEIS UK decision also reflects the FCA's evolving enforcement strategy. By encouraging early cooperation and voluntary restitution, the regulator has demonstrated a willingness to prioritize rapid compensation for consumers while still publicly censuring firms that fall short of expected standards.

For banks, custodians and other financial institutions, the message is increasingly clear.

Strong financial crime controls extend well beyond compliance exercises and require firms to challenge anomalies, respond decisively to emerging risks and ensure governance frameworks effectively protect client assets before problems escalate into enforcement action.