The island’s financial services regulator has handed out fines totalling just under £3m in the past 12 months.

Last week, life insurance giant RL360 was hit with a £1.95m penalty - the largest fine ever imposed by the Financial Services Authority.

Critics say the scale of the discretionary civil penalties issued by the FSA is not fair or proportionate for what are paper breaches of the anti-money laundering code.

But the FSA said enforcement action is taken when it is ‘proportionate, reasonable and appropriate’ to do so - and insists there is no bonus or incentive scheme linked to the size or number of fines issued.

All permanent members of staff can benefit from what are termed ‘non-consolidated performance-related incentives’ (PRI) on top of their salaries, but the FSA insists this is a small element of pay and again it’s not related to income from fines.

An FoI response has revealed that £72,892 was handed out as PRI to 55 members of staff in 2023-24 when the scheme was introduced. This included £17,416 to the CEO and heads of division.

In a statement, the FSA said: ‘The Isle of Man Financial Services Authority does not set targets in terms of income from discretionary civil penalties and does not operate any staff bonus or performance-related incentive schemes that are linked to its enforcement action or the issuance of discretionary civil penalties.’

It follows a £614,009 penalty handed to trust and corporate services provider IQ EQ IoM in December, a fine of just under £293,930 imposed on HSBC IoM in November and one of just under £119,596 given to Capital International in September. That’s a total of £2,977,535.

One member of the island’s financial services sector, who wishes to remain anonymous, said he believed the fines were about placating the Council of Europe anti-money laundering body MoneyVal ahead of its visit in September 2026.

He said: ‘Another long-term business with over 30 years in the Isle of Man, employing thousands over that time, has been sacrificed on the alter of the MoneyVal inspection - a fine of £2.7m negotiated down to just under £2m for basically doing very little other than tick box breaches of highly complex money laundering laws.

‘Staff numbers and fees go up despite them sitting over an industry which is in decline largely because of them.’

Under a new funding model, introduced from April last year, the FSA’s costs of enforcement, including legal costs, can be offset against discretionary civil penalty income.

There were four civil penalties issued in 2023-24 resulting in income totalling £1,581,811 - up from £307,292 the previous year.

The FSA said the level of discretionary civil penalty imposed is calculated as a percentage of the firm’s annual income and so those imposed on larger regulated entities - such as RL360 - will differ significantly from those on smaller firms.