- Security TWENTY
- Women in Security
The UK regulator the Financial Conduct Authority (FCA) has fined Standard Chartered Bank £102,163,200 for Anti-Money Laundering (AML) breaches in two higher risk areas of its business. This is the second largest financial penalty for AML controls failings ever imposed by the FCA.
The bank’s two areas were its UK wholesale bank correspondent banking business; and its branches in the United Arab Emirates (UAE). The FCA found what it called serious and sustained shortcomings in Standard Chartered’s AML controls relating to customer due diligence and ongoing monitoring. Standard Chartered failed to establish and maintain risk-sensitive policies and procedures, and failed to ensure its UAE branches applied UK equivalent AML and counter-terrorist financing controls.
Under the Money Laundering Regulations 2007 (MLRs), Standard Chartered was required to establish and maintain appropriate and risk sensitive policies and procedures to reduce the risk it may be used to launder the proceeds of crime, evade financial sanctions or finance terrorism. The MLRs also imposed a duty on Standard Chartered to require its global (non-EEA) branches and subsidiaries to apply policies and procedures in due diligence and ongoing monitoring that are equivalent to those required of Standard Chartered in the UK.
For example, the Authority found an account opened with three million UAE Dirham in cash in a suitcase (just over £500,000) with little evidence that the origin of the funds had been investigated.
US authorities have separately set larger fines. For the FCA decision notice, visit the FCA website. For the United States’ authorities fining the bank, visit the US federal Department of Justice website.
Mark Steward, Director of Enforcement and Market Oversight at the FCA, 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.’
For the bank’s comment, visit the Standard Chartered website. Bill Winters, Group Chief Executive, said: “We are pleased to have resolved these matters and to put these historical issues behind us. The circumstances that led to today’s resolutions are completely unacceptable and not representative of the Standard Chartered I am proud to lead today. Fighting financial crime is central to what we do and who we are; we do not tolerate misconduct or lax controls and we will continue to root out any issues that threaten the trust we have built over more than 160 years.”