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FCA levies first fine under new AML regime

In the first anti-money laundering (AML) case under the new penalty regime, applying to breaches since 6th March 2010, the FCA has fined Standard Bank plc £7,640,000. The fine was subject to a reduction of 30% for early settlement.  In its decision notice, the FCA details its finding that during the period from 15th December 2007 to the 20th July 2011, South Africa’s largest bank failed to comply with the 2007 Money Laundering Regulations in relation to its policies and procedures for dealing with corporate customers connected to politically exposed persons (PEP’s).  Guidance issued by the Joint Money Laundering Steering Group (JMLSG) details that known connections to a PEP must trigger enhanced due diligence (EDD) measures. The range of people classifiable as a PEP and the consequent number of possible connections is extensive, requiring substantive and ongoing client outreach. Standard Bank was particularly at risk of breaching the regulations as it deals with corporate customers in a number of jurisdictions regarded as high-risk for AML purposes. Of the bank’s 5,339 corporate customers, 282 were linked to “politically exposed persons”. “The Financial Conduct Authority made no finding that the bank had ever handled the proceeds of crime,” Standard Bank said in a statement. The FCA said Standard Bank had “improved its customer risk assessment process in April 2009 by introducing a more comprehensive risk classification process”.

This latest fine by the FCA further underlines the new reality for all UK financial institutions- “light touch” self-regulation is long gone. Both the FCA and the PRA have shown themselves both willing and able to fully enforce the whole raft of recent complex legislation.

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