Decision maker

Regulatory Decisions Committee 

Firm

Mr Kasim Garipoglu

Related material

None

Sanction

Prohibition: Mr Garipoglu was prohibited from performing any function in relation to any regulated activities carried on by any authorised or exempt persons, or exempt professional firm pursuant to section 56 of FSMA 2000.

The FCA’s press release states that it was not able to fine Mr Garipoglu due to the length of time since he was an approved person. However, given that the statutory time limit for issuing a Warning Notice is by reference to number of years since the FCA knew of the misconduct and it appears the FCA’s investigation into Mr Garipoglu began in July 2017, it may be that the lack of financial penalty was rather due to the length of time that the FCA had been aware of matters referenced in the Notice. The nine years between the commencement of the investigation and the outcome also suggests that some cases are still taking a long time to conclude, despite the FCA’s efforts to speed up the process.

In an attempt to avoid a prohibition order, Mr Garipoglu offered to give legal undertakings and to provide £2m in security which would be forfeited were he to breach any of the undertakings. The FCA rejected this offer on the basis that the undertakings did not pose a reliable safeguard against the risk posed by Mr Garipoglu and that the acceptance of such an offer would be tantamount to the FCA offering a route for wealthy individuals to avoid prohibition.

Provisions

• Section 56 of FSMA 2000: The FCA has the power to prohibit an individual under section 56 of the Act if it appears to FCA that the individual is not a fit and proper person. 

• FIT 1.3.1G and FIT 2: The FCA will have regard to a number of factors when assessing the fitness and propriety of a person, as described in FIT 2. The most important considerations will be the person’s honesty, integrity and reputation, competence and capability and financial soundness.

Relevant period

18 April 2012 to 12 December 2022 (over ten years)

Factual findings

Mr Garipoglu was the ultimate beneficial owner of two FCA authorised firms (Company A and Company B), held controlled functions at Company A and was also the sole or dominant member of its Board of Directors.

The FCA found that Mr Garipoglu, in the course of his role at Company A and whilst an approved person at that firm, communicated with his staff in a manner that was highly inappropriate in the context of the level of responsibility he possessed. In particular, the FCA identified email chains in which he expressed views which demonstrated:

• a disregard for AML and compliance obligations and general regulatory requirements, and a disregard for the advice and views of AML and compliance personnel;

• a willingness to instruct a course of action either without an honest and reasonable belief, or being reckless, as to whether that course of action was compliant with regulatory requirements;

• a willingness to run a serious risk of breach of regulatory requirements in order to try to achieve a commercial advantage, including assessing the potential commercial benefit to be derived from that course of conduct as against the risk of detection and the size of any possible penalty; and

• positive encouragement for excessive risk-taking in relation to regulatory compliance and the prioritisation of profitability over compliance.

1. In addition, the FCA found that Mr Garipoglu deliberately sought to mislead the FCA by providing false or misleading documentation, including in respect of compulsory AML training, proof of address documentation, Mr Garipoglu’s education and in support of an application for authorisation by Company B. 

2. Mr Garipoglu’s conduct included ignoring and overruling the views of the compliance team in London who were strongly opposed to introducing a new onboarding model which would allow customers to commence trading without first verifying their identity, and a new payment system which raised AML concerns regarding the tracing and monitoring of funds.

3. Mr Garipoglu’s contemporaneous communications suggested that he viewed regulatory compliance as restrictive to business and that it should be ignored and he maintained to the FCA that these were normal conversations and good governance, demonstrating a healthy discussion about what was permitted under regulatory requirements.

4. Mr Garipoglu also instructed a colleague to impersonate him in communications with the South African regulator and instructed staff to take an AML test on his behalf, passing off the result as his own.

5. Other conduct identified by the FCA included:

• onboarding a high-risk customer contrary to the advice of the compliance team;

• suggesting that staff in the Turkey branch should lie to the compliance team in London;

• authorising a marketing payment to be made to a third-party on whom due diligence had not been completed, despite concerns in relation to financial crime risk being expressed by the compliance team in London;

• encouraging the creation of false documentation to deceive the compliance team in London and local regulators, and encouraging bribery; and

• encouraging staff to ignore legal requirements and do whatever was necessary to bring in new customers.

Failings

The FCA found that that Mr Garipoglu was not “fit and proper” and that, in light of the serious nature of Mr Garipoglu's misconduct, involving a lack of honesty and integrity over an extended period of time, and taking into account that Mr Garipoglu did not accept that he had behaved improperly and instead sought to justify his behaviour, the FCA considered that Mr Garipoglu posed a risk to consumers and to the integrity of the UK financial system.