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FCA Fines UK Bank For Lax Anti-Money Laundering Controls

Sandra Kilhof

12 August 2013

The Financial Conduct Authority has fined Guaranty Trust Bank £525,000 for failing to have sufficient anti-money laundering controls for high risk customers between May 2008 and June 2010, at the height of the financial crisis.

The regulator said that the failings are “particularly serious” because they affected customers based in countries associated with a higher risk of money laundering, bribery or corruption, including accounts held by politically exposed persons.

“Banks are at the front line in ensuring the proceeds of crime do not enter the UK financial system. GT Bank’s failures were serious and systemic and resulted in an unacceptable risk of handling the proceeds of crime,”  said Tracey McDermott, director of enforcement and financial crime at the FCA.

GT Bank, a subsidiary of Nigerian Guaranty Trust Bank, opened an office in London in May 2008 offering retail and wholesale banking products and services to private, corporate and institutional clients. Its controls were reviewed in 2010 when the FCA’s predecessor, the Financial Services Authority, conducted a review into banks’ management of money-laundering risks.

According to the review, GT Bank did not establish effective anti-money laundering policies, by failing to assess potential money-laundering risks posed by higher risk customers; screen prospective customers; obtain senior management approval to establish business relationships with politically exposed persons; establish the purpose of prospective customers’ accounts or the sources of customers’ wealth; and by failing to review the activity of higher risk customers’ accounts.  

As a result, the regulator said that GT Bank did not fully assess their higher risk customers’ activities and thereby breached a number of rules on systems and controls, as well as FCA Principle 3, “which requires firms to take reasonable care to control their affairs responsibly and effectively”.

“Regardless of whether firms are well established or new to the industry they must ensure that they have systems and controls to manage money laundering risk,” McDermott added.

GT Bank settled at an early stage of the investigation and qualified for a 30 per cent discount on its fine, which originally was set to £750,000.