This week the FSA has fined Habib Bank AG Zurich (a privately owned Swiss bank) £525,000 for having inadequate anti-money laundering controls. It also fined the bank’s Money Laundering Reporting Officer (MLRO) £17,500 for failings in performance of the money laundering reporting controlled function.
In March Coutts & Company were fined £8.75 million for failing to take reasonable care to establish and maintain effective anti-money laundering systems and controls relating to high risk customers, including Politically Exposed Persons . In both cases there was no suggestion that money laundering had actually taken place.
These fines follow on from the FSAs thematic review focusing on the steps banks and building societies take to detect and prevent AML in higher-risk situations. Between early 2010 and February 2011 the FSA visited 27 banking groups in the UK with significant international activity, including banks from higher risk countries and private banks.
The subsequent report published in June 2011 identified some good practice but the FSA's principal conclusion was that three-quarters of the banks visited, including major banks, are not consistently managing their relationships with high-risk customers and PEPs effectively, and must do more to ensure they are not being used for money laundering.
As a result of the review and related casework, the FSA has referred a number of banks to its enforcement and financial crime division and it is likely there will be more institutions and individuals who will be subject to fines in the coming months and possible criminal proceedings if actual money laundering is uncovered.