The FCA last week fined Commerzbank AG (London Branch) £37,805,400 for its failure to put adequate anti-money laundering (AML) systems and controls in place for the period dating October 2012 to September 2017.
This is one of several substantial fines recently issued by the FCA which, along with a recent move by the FCA towards criminal prosecutions in this space, is illustrative of a hardening in the regulator’s approach to AML-control related breaches.
Commerzbank London was found to have breached Principle 3 of the FCA’s Principles for Business, by failing to have adequate risk management systems in place. The weaknesses identified were deemed to present an unacceptable risk that Commerzbank London would be used to further financial crime.
The FCA raised specific concerns with Commerzbank London about weaknesses in their systems on 3 separate occasions in 2012, 2015 and 2017, yet Commerzbank London was found to have failed to take reasonable and effective steps to address the issues.
In its Final Notice, published 17 June, the FCA set out the reasons for its findings, which can be summarised as follows:
In addition, the FCA criticized Commerzbank London for failing to heed guidance that was published during the relevant period advising on steps to be taken to reduce financial crime risks and contemporary enforcement action against other firms for similar control failures.
The FCA explained that Commerzbank London had undertaken significant remediation measures and conducted a past review to identify suspicious transactions in the relevant period. It therefore qualified for a 30% discount - without this discount its fine would have been over £54 million.
Commerzbank London is one of several banks subject to recent high-level fines by the FCA for AML failings. Others include:
The FCA expects financial institutions to maintain an effective risk-based AML control framework to minimise the risk of being used by criminals for money-laundering or financing terrorism.
Lessons to be learned from the Commerzbank London case include:
With a marked increase in enforcement action taken by the FCA, it is more important than ever that you are confident that you can defensibly evidence that you are meeting your AML control obligations.
TLT provides an end to end financial crime solution which ensures your financial crime systems and controls meet the relevant regulatory requirements.
Should you wish to discuss this further please do not hesitate to contact Michael Ruck or Noline Matemera.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at June 2020. Specific advice should be sought for specific cases. For more information see our terms & conditions
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