The Financial Services Authority (FSA) has fined Coutts & Company (Coutts) £8.75 million for failing to take reasonable care to establish and maintain effective anti-money laundering (AML) systems and controls relating to high risk customers, including Politically Exposed Persons (PEPs).
The failings at Coutts were serious, systemic and were allowed to persist for almost three years. They resulted in an unacceptable risk of Coutts handling the proceeds of crime.
In October 2010, the FSA visited Coutts as part of its thematic review into banks’ management of high money-laundering risk situations. Following that visit, the FSA’s investigation identified that Coutts did not apply robust controls when starting relationships with high risk customers and did not consistently apply appropriate monitoring of those high risk relationships. In addition, the FSA determined that the AML team at Coutts failed to provide an appropriate level of scrutiny and challenge.
The FSA identified deficiencies in nearly three quarters of the PEP and high risk customer files reviewed. Specifically, in one or more of each inadequate file Coutts failed to:
- gather sufficient information to establish the source of wealth and source of funds of its prospective PEP and other high risk customers;
- identify and/or assess adverse intelligence about prospective and existing high risk customers properly and take appropriate steps in relation to such intelligence;
- keep the information held on its existing PEP and other high risk customers up-to-date; and
- scrutinise transactions made through PEP and other high risk customer accounts appropriately.
Tracey McDermott, 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.
Press release link: here
Link to final notice (pdf): here