The Financial Services Authority (the "FSA") fined Habib Bank AG Zurich ("Habib") £525,000 on 4 May 2012 for failing to establish and maintain adequate anti-money laundering ("AML") systems and controls.
The FSA found that the failings at Habib continued for almost three years between 15 December 2007 and 15 November 2010 and exposed Habib to an unacceptable risk of handling the proceeds of crime. In particular, the FSA determined that Habib had failed to: (i) establish and maintain an adequate procedure for assessing the level of money laundering risk posed by prospective and existing customers (including maintaining a flawed High Risk Country List); (ii) conduct sufficient enhanced due diligence in relation to higher risk customers; (iii) carry out adequate reviews of its AML systems and controls; and (iv) revise training adequately to address shortcomings in AML practice identified by the Money Laundering Reporting Officer and maintain sufficient records of completion of AML training for staff and of all AML steps taken on individual customer accounts.
In deciding upon the appropriate disciplinary sanction, the FSA took into account that Habib cooperated fully with the FSA’s investigation and that Habib had taken prompt steps to implement a number of AML improvements recommended in a skilled person’s report of November 2010. Habib also agreed to take such further remedial steps as are necessary to ensure that its AML procedures are now suitably robust.
The Habib fine is one of a series of significant fines imposed by the FSA on deposit takers for inadequate AML systems and controls. Following a thematic review of AML procedures last year, the FSA identified a number of widespread shortcomings in this area, particularly in relation to banks’ management of high risk customers including Politically Exposed Persons (PEPs), correspondent banking relationships and wire transfer payments. Among other findings, three-quarters of the banks sampled during the thematic review had failed to take adequate measures to establish the legitimacy of the source of their customers’ wealth and the source of the funds to be used in the business relationship