FSA has issued its first fine relating to AML requirements and correspondent banking. It fined Turkish Bank (UK) Limited £294,000 for breaches of the Money Laundering Regulations 2007 (MLR). FSA visited the bank as part of a thematic review in 2010 and found it had acted as correspondent bank for nine respondent banks in Turkey and six respondent banks in Northern Cyprus until July 2010. Correspondent banking is a high-risk area, especially for respondents in countries like Turkey and Northern Cyprus whose AML laws do not meet European Economic Area standards. FSA found the bank did not:

  • establish and maintain appropriate and risk-sensitive AML policies and procedures for its correspondent banking relationships;
  • carry out adequate due diligence on, and ongoing monitoring of, the respondent banks it dealt with, and also failed to reconsider these relationships when this was not possible; and
  • maintain adequate records relating to the above.

FSA said the breaches were not deliberate or reckless, but it had previously warned the bank about its correspondent banking relationships, which had been in place for some time. When the MLR came into force, the bank should have both updated its internal policies and procedures and reviewed the due diligence it held on the respondent banks. It did neither. In assessing the level of the fine, FSA took into account the serious risk to the UK financial system. In the bank’s favour, FSA noted the bank had taken action against the senior managers responsible for the breaches and has now taken remedial measures. (Source: FSA Fines Turkish Bank for AML Failings)