FSA fines Turkish Bank £300k for money laundering failings

The Financial Services Authority (FSA) has fined Turkish Bank £294,000 for breaching the regulations on money laundering.

The FSA said that the breaches, which related to Turkish Bank UK correspondent banking arrangements, were widespread and lasted over two and a half years. 

In July 2010, the FSA visited Turkish Bank as a part of a thematic review on how banks operating in the UK were managing money laundering risks.

The regulator found that the bank failed to establish and maintain appropriate and risk-sensitive anti-money laundering policies and procedures and it failed to carry out adequate due diligence on the respondent banks it dealt with.

Turkish Bank UK is a wholly owned subsidiary of Northern Cyprus-based Turkish Bank and has a mainly retail customer base.

It offers a range of financial services, including correspondent banking, which involves a bank providing banking services to an overseas bank to enable the bank to provide its own customers with cross-border products and services.

Turkish Bank UK has acted as a correspondent bank for nine respondent banks in Turkey and six respondent banks in Northern Cyprus between 15 December 2007 and 3 July 2010.

This is the first time the FSA has taken enforcement action against a firm in relation to money laundering weaknesses in its correspondent banking arrangements, it said.

The regulator said that while the failings are not deliberate or reckless, but found the failings more serious as the FSA had already warned the bank on the topic.

Tracey McDermott, acting director of the enorcement and financial crime division, said: 'Banks must have appropriate policies and procedures in place to manage these risks. Turkish Bank’s correspondent banking business made it particularly vulnerable to money laundering risks and its failings exposed UK financial services to the possibility that money could be laundered through the UK. 

‘We will continue to demand the highest standards from banks and to take tough action for those banks that fail to meet them.’