Financial Supervisory Authority issues public warning to Ålandsbanken Abp
The Financial Supervisory Authority (FIN-FSA) has issued a public warning to Ålandsbanken Abp (Bank of Åland Plc) for omissions concerning the custody of customer assets and compliance with the provisions for ensuring the functionability of internal control.
The omissions occurred between September 2009 and November 2011. FIN-FSA became aware of the omissions during an inspection of transaction reporting in spring 2012.
According to FIN-FSA's inspection findings, Ålandsbanken Abp had, from autumn 2009 to November 2011, regularly entered customers' book-entry securities in its own book-entry accounts, instead of in nominee-registered commission accounts. The bank's all customer stock exchange transactions subject to CCP clearing circulated via one such account. The financial instruments were legally in the bank’s ownership. In the event of the bank's insolvency, the erroneous practice would have at least delayed the return of the ownership of the financial instruments to the customers.
FIN-FSA considers the obligation to keep customer assets separate from an investment service provider’s own assets to be such a key aspect of investor protection that a public warning is a sanction proportionate to the failure to comply with the obligation. Owing to the seriousness of the error, unprompted rectification of the error as proposed by the bank does not remove the possibility to issue an administrative sanction.
The custody, handling and clearing of financial instruments must be arranged in a dependable manner so that there is no danger of mixing the financial instruments with the bank's own funds.
The administrative sanctions available to FIN-FSA in the present case are public reprimand and public warning.
A public warning does not have legal force. The bank may appeal the decision of 4 February 2013 to the Market Court within 30 days of receipt of notice of the decision.
For further information, please contact
- Erkki Kontkanen, Chief Advisor, tel. +358 10 831 5260.
- Decision by the Financial Supervisory Authority (in Swedish, pdf)