Following yesterday's seminar on the CASS regime, the Financial Services Authority ("FSA") has provided a timely reminder of the significant consequences of breaching those rules.
Yesterday, the FSA published its Final Notice on BlackRock Investment Management (UK) Limited ("BlackRock"), imposing a fine of £9,5 million for breaches of the CASS requirement for trust status letters.
For a period of almost four years, BlackRock failed to ensure that the necessary trust letters were in place for money market deposits held with third party banks. This oversight occurred following BlackRock Group's acquisition of Merrill Lynch Investment Managers Limited. Following the acquisition, BlackRock's systems were not properly updated and the procedures that had previously been in place for setting up trust letters were no longer effective.
This fine confirms that CASS compliance remains very much a current priority for the FSA. Further fines of this magnitude shall not come as a surprise. It is critical for firms to ensure all policies and procedures are regularly reviewed to take account of any significant changes within the firm.