The second largest financial penalty ever imposed by The Financial Conduct Authority (FCA) for Anti-Money Laundering (AML) failings has been made public.
Standard Chartered Bank has been fined £102,163,200 for AML breaches, following FCA investigations into two higher risk areas of the business, one being their UK Wholesale Bank Correspondent Banking and the other their branches in the United Arab Emirates (UAE). This hefty fine has already had a 30% reduction applied, as Standard Chartered did not dispute and therefore agreed to accept the FCA’s findings; otherwise it would have been an even bigger £145,947,500.
This result comes from the FCA finding serious and significant shortcomings in Standard Chartered’s AML controls and its own internal adequacy assessments of its AML controls, between 2009 and 2014. The former relating to customer due diligence and ongoing monitoring, by failing to establish and maintain risk sensitive polices and procedures, whilst also failing to ensure its UAE branches applied UK equivalent and counter-terrorist financial controls. The latter being its approach towards identifying and mitigating material money laundering risks and its escalation of money laundering risks, which then exposed them to the risk of breaching sanctions and increased the risk of them receiving and/or laundering the proceeds of crime, thus leading Standard Chartered Bank to breach Money Laundering Regulation. A few examples of these damaging pitfalls being:
- Opening an account with 3 million UAE Dirham in cash in a suitcase (just over £500,000) with little evidence that the origin of the funds had been investigated
- Failing to collect sufficient information on a customer exporting a commercial product which could, potentially, have a military application. This product was exported to over 75 countries, including two jurisdictions where armed conflict was taking place or was likely to be taking place
- Not reviewing due diligence on a customer despite repeated red flags such as a blocked transaction from another bank indicating a link to a sanctioned entity
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…’
To add fuel to the fire, US authorities have also now taken action against the Standard Chartered group for significant violations of US sanctions laws and regulations.
To read more about what the FCA has to say about the fine, please click HERE.
To see information on the support we can provide surrounding AML please look at our course HERE.