The Financial Conduct Authority has issued its second largest financial penalty ever for AML controls failings, after fining Standard Chartered Bank £102.2m for breaches in two areas of the business.
Investigations by the FCA found serious and sustained shortcomings in Standard Chartered’s AML controls for its UK Wholesale Bank Correspondent Banking business and branches in the United Arab Emirates.
Under the Money Laundering Regulations 2007, the bank is required to maintain policies and procedures to reduce the risk of being used to launder the proceeds of crime, evade financial sanctions or finance terrorism.
The FCA found that the bank had failed to establish said activities and furthermore did not ensure its branches in the UAE applied AML and counter-terrorist financing controls.
Examples of the bank’s shortcomings included opening an account with DHs3m (£626,000) in cash in a suitcase with little evidence of an investigation into its origin.
The failing occurred in its UK Correspondent Banking arm from November 2010 to July 2013, and in its UAE branches from November 2009 to December 2014.
The firm had been facing a hefty fine of £145.9m but was qualified for 30 per cent discount after accepting the regulator’s findings.
FCA director of enforcement and market oversight Mark Steward said, “Standard Chartered’s oversight of its financial crime controls was narrow, slow and reactive.
“These breaches are especially serious because they occurred against a backdrop of heightened awareness within the broader, global community, as well as within the bank, and after receiving specific attention from the FCA, US agencies and other global bodies about these risks.
“Standard Chartered is working to improve its AML controls to ensure all issues are fully addressed on a global basis. The FCA has taken into account Standard Chartered’s remediation work and its cooperation in assisting the FCA investigation, without which today’s financial penalty would have been even higher.”
Standard chartered has also faced action from US authorities this week, regarding significant violations of US sanction laws.
Earlier this year, the FCA fined Goldman Sachs International £34.3m for failures with transaction reporting.
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