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FSA fines Coutts £8.8 million for anti-money laundering failings
by Michelle Abrego on Mar 26, 2012 at 10:36
The Financial Services Authority (FSA) has fined Coutts £8.75 million for failing to establish and maintain effective anti-money laundering systems and controls relating to high risk customers.
The FSA said the failings at Coutts were 'serious', 'systemic' and were allowed to persist for almost three years.
The regulator visited Coutts in October 2010 as part of a thematic review into the banks’ management of high-money laundering risk situations, where it identified that Coutts did not apply robust controls when dealing with high-risk or politically exposed persons.
The regulator identified deficiencies in nearly three quarters of politically exposed and high-risk consumer files reviewed.
The files failed to gather sufficient information to establish the source of wealth and source of funds for the consumers, identity or assess adverse intelligence about prospective and existing high risk properly, and to keep consumer information up to date.
The bank also failed to scrutinise transactions made through the accounts appropriately, the FSA said.
Tracey McDermott, FSA acting director of enforcement and financial crime, said: ‘Coutts’ failings were significant, widespread and unacceptable. Its conduct fell well below the standards we expect and the size of the financial penalty demonstrates how seriously we view its failures.
'This penalty should serve as a warning to other firms that, not only should they ensure they constantly review and adapt their controls to changing financial crime risks within their businesses, but that they must also make changes to reflect changing regulatory or other legal standards.'
The regulator would have imposed a fine of £12.5 million, but Coutts agreed to settle at an early stage.
As a result of the review, Coutts has implemented a number of improvements and recommendation including remedial amendments to customer files.
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