Brickwood Asset Management Appoints FinScan for Sanctions Screening

Brickwood Asset Management, a UK value equities boutique, has appointed FinScan, the anti-money laundering (AML) screening business of Innovative Systems, to screen the companies in its funds and their directors on an ongoing basis against global sanctions lists and adverse media.

The deal is a small one by industry standards. Brickwood is a boutique, not a bank, and the companies did not disclose the contract value or a go-live date. It is still a clear example of asset manager sanctions screening reaching beyond the client list to the issuers a fund holds.

Brickwood said sanctions checks on the companies it holds are a regulatory requirement. The adverse media checks are not, and the firm added them voluntarily.

What the asset manager sanctions screening covers

Brickwood will screen portfolio companies and the individuals who direct them. FinScan’s platform checks corporate entities and individuals against sanctions lists, politically exposed person (PEP) databases and adverse media sources.

Adverse media means negative news coverage linking a company or person to fraud, corruption, financial crime or similar conduct. Sanctions lists are binary: a name is designated or it is not. Adverse media is judgment-based, which is why most firms treat it as a risk signal rather than a legal bar.

The screening is continuous rather than a one-off check at purchase. A holding that is clean when a fund buys it can have a director designated, or a news event attach to it, months later. Ongoing monitoring is meant to catch that change while the position is still in the portfolio.

FinScan uses configurable matching, which lets a firm tune how closely a name must resemble a list entry before an alert is raised. Innovative Systems said the technology improves the precision and explainability of results and reduces duplicate and lower-priority alerts. The platform also keeps an audit trail of completed reviews.

Why a long-only manager screens investee companies

A long-only equity manager has no counterparties in the way a bank does. Its exposure sits in what it owns. Brickwood’s chief executive said the issuers in its funds are the point of the exercise.

“Screening the issuers we hold against global sanctions is a core regulatory requirement, and ensuring that process is supported by a high-quality screening solution was an important consideration for us. Adverse media screening is a step we chose to take beyond that requirement. FinScan gives us ongoing coverage across both, with a clear audit trail behind every review.”

Claudia Ripley, CEO, Brickwood Asset Management

UK financial sanctions are administered by the Office of Financial Sanctions Implementation (OFSI), part of HM Treasury. OFSI publishes the consolidated list of targets and enforcement decisions, and it takes reports of suspected breaches.

An asset freeze bars dealing with the funds or economic resources of a designated person. Under the UK regulations, an entity can be treated as owned or controlled by a designated person, for example through a majority of shares or voting rights or the power to appoint most of the board. A portfolio company’s directors and owners therefore matter as much as its own name. That is the practical reason to screen directors alongside issuers.

Brickwood did not say which specific rules drive its program beyond the sanctions requirement Ripley described. The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, SI 2017/692, set the wider UK framework. They require covered firms to carry out risk assessments, maintain internal controls and apply enhanced due diligence to politically exposed persons.

Voluntary adverse media adds a second layer

The adverse media step is where Brickwood goes past the baseline. For an asset manager, sanctions screening answers whether a holding or its directors are designated today. Adverse media looks for conduct that could lead to designation, enforcement or reputational damage before any list changes.

Innovative Systems chief revenue officer Ben Sher said the choice to cover both holdings and their directors was “a considered choice, and one we expect to see more of across the asset management market.” He said asset managers face real scrutiny from allocators and regulators.

Allocators are the pension funds, endowments and other institutions that place money with managers. Their due diligence questionnaires commonly ask how a manager controls financial crime and sanctions risk. A documented, auditable screening process gives a small manager an answer it can show.

The audit trail serves a second purpose. When a conduct regulator such as the Financial Conduct Authority (FCA) or an allocator asks why a name was cleared, the manager can point to a recorded review rather than reconstruct it. The record is the evidence that the control ran.

FinScan and Innovative Systems in the market

Innovative Systems provides AML technology and consultancy. Its offering combines know your customer (KYC) checks, sanctions screening, risk scoring, data quality capabilities and advisory support. The platform is available as software-as-a-service (SaaS), on-premise or hybrid.

The company said its SaaS customers process more than 300bn name screenings each year. That volume reflects its bank and payments clients, not boutique managers like Brickwood, which screens a short list of holdings and directors.

FinScan’s recent UK wins are mostly in banking. Vanquis Banking Group selected the platform for an AML overhaul. Brickwood extends the customer base into buy-side firms, where screening is a smaller program with fewer staff to run it.

That matters for how the tools are built. A small manager has little capacity to clear false positives, so alert volume and the ability to explain a match decide whether a screening program is usable. The same pressure is pushing larger institutions to combine screening and KYC data and to review how their AML technology stacks fit together.

What asset manager sanctions screening means for peers

The Brickwood appointment does not change any rule. It shows how one regulated manager reads its obligations: sanctions checks on issuers as a requirement, adverse media on issuers and directors as an elective control.

For compliance teams at larger asset managers, the comparison point is scope. Screening only clients and counterparties leaves the portfolio itself outside the control. Screening holdings and directors continuously brings it inside, and the review record shows what was checked and when.

UK economic sanctions lists continue to change, and each designation can reach the companies a fund already owns. Brickwood and FinScan have not said when screening goes live. The next test is whether other boutique managers, as Sher expects, add adverse media to their own screening programs.