The Financial Conduct Authority (FCA) has fined EFG Private Bank Ltd (EFG) £4.2 million for failing to take reasonable care to establish and maintain effective anti-money laundering (AML) controls for high risk customers. The failings were serious and lasted for more than three years.
As part of a thematic review of how UK banks were managing money laundering risk in higher risk situations, the Financial Services Authority (FSA) visited EFG in January 2011. That visit and further investigation caused serious concern to the FSA. The investigation found that EFG had not fully put its AML policies into practice. Of particular concern was that 17 of 36 reviewed customer files, opened between December 2007 and January 2011, contained customer due diligence that highlighted significant money laundering risks, but insufficient records of how the bank’s senior management had mitigated those risks.
Of these 17 files, the FSA found that the risks highlighted in 13 files related to allegations of criminal activity or that the customer had been charged with criminal offences including corruption and money laundering.
For example in one account, EFG’s due diligence highlighted that a prospective client had acquired their wealth through their father, about whom there were allegations of links with organised crime, money-laundering and murder. However there was insufficient information on file to explain how the bank concluded that this risk was acceptable or how it was mitigating the risks.
EFG also failed to appropriately monitor its higher risk accounts. Of the 99 PEP and other high risk customer files reviewed by the FSA, 83 raised serious concerns about EFG’s monitoring of the relationship.
As a result of these failures, EFG breached FSA Principle 3, requiring it to take reasonable care to organise and control its affairs responsibly and effectively.
Detailed press release link from FCA: click here
Link to final notice: click here