LONDON Jan 23 Britain's financial regulator has
fined the UK arm of South Africa's Standard Bank Group
7.6 million pounds ($12.6 million) for lax anti-money laundering
controls of corporate customers linked to people holding
prominent public positions.
The Financial Conduct Authority (FCA), which along with its
predecessor has been cracking down on how banks manage money
laundering risks since 2011, said on Thursday it was the first
time it had brought such a commercial banking case.
"If they (banks) accept business from high-risk customers
they must have effective systems, controls and practices in
place to manage that risk. Standard Bank clearly failed in this
respect," said Tracey McDermott, head of the FCA's enforcement
and financial crime division.
The FCA reviewed 48 Standard Bank corporate customer files
between December 2007 and July 2011. It said all had connections
with so-called politically exposed people (PEPs) and highlighted
"serious weaknesses" in how the bank applied its policies and
Regulators say that where corporate customers are known to
be linked to a PEP, for example through a directorship or
shareholding, banks should increase due diligence because these
customers are likely to be in a higher-risk category.
During the relevant period, Standard Bank had business
relationships with 5,339 corporate customers, of which 282 were
linked to one or more PEPs. However, it had consistently failed
to carry out adequate enhanced due diligence checks or conduct
appropriate levels of ongoing monitoring, the FCA said.
Standard Bank, which cooperated with the FCA during the
investigation, said measures introduced since 2010 included
refreshing all active client files, conducting a compliance and
business review and increasing resources to beef up its
anti-money laundering compliance controls.
It noted that the FCA had not suggested the bank had ever
handled the proceeds of crime.