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Financial Services Law Insights and Observations

FCA fines UK bank £108 million over AML controls

Financial Crimes Of Interest to Non-US Persons Financial Conduct Authority UK Enforcement Anti-Money Laundering

Financial Crimes

On December 9, the Financial Conduct Authority (FCA) fined a UK bank more than £107.7 million for allegedly maintaining inadequate anti-money laundering (AML) controls at its business banking division. The bank’s AML controls and attempts to correct the problems were inadequate according to the FCA and “created a prolonged and severe risk of money laundering and financial crime.” The FCA further claimed that these alleged “serious and persistent gaps” prevented the bank from adequately overseeing more than 560,000 business customers between December 2012 and October 2017. According to the FCA, due to the alleged deficiencies, the bank was purportedly unable to verify information provided by customers about their business intentions and was unable to properly monitor the money that customers claimed would be going through their accounts compared with what was actually being deposited. The FCA’s investigation also identified several other mismanaged accounts that left the bank vulnerable to money laundering risk and found examples where the bank failed to promptly address “red flags” associated with suspicious activity. As a result, more than £298 million was routed through the bank before the accounts were closed.

The FCA noted, however, that the fine was reduced from nearly £154 million (a 30 percent discount) due to the bank not disputing the findings. The bank, which has fully cooperated with the FCA’s investigation, released a statement emphasizing that while it took action to address the AML issues once they were identified, it accepts that its “AML framework at the time should have been stronger.” The bank has since implemented significant changes to address these issues by overhauling its financial crime technology, systems, and processes.