Coutts
private bank, a division of the Royal Bank of Scotland, has been fined £8.75m
by the Financial Services Authority (FSA) for not displaying adequate measures
to prevent money laundering. After reviewing 103 high-risk
customer files the FSA found deficiencies in at least 73 of them.
The
bank has received the largest fine of its sort for breaching anti money
laundering (AML) rules, after three years of ‘systemic’ problems in handling
client affairs vulnerable to corruption because of customers’ political links.
The
FSA found, after an industry-wide review in October 2010, that the bank was not
conducting robust enough checks, nor were they monitoring relationships with
high-risk customers to a satisfactory degree or verifying origins of deposits
being made. Therefore, any suspicious funds being laundered through the account
were not being highlighted.
The
failings displayed by Coutts have been labelled as ‘significant, widespread and
unacceptable’ with its conduct falling well below the standards expected. The
fine which has been awarded to Coutts demonstrates the severity with which the
FSA is regarding anti money laundering and should serve as a sharp reminder to
other major players in the industry.
But surely
avoidance of such fines is simple? Banks should surely have in place a system
with which to manage and track any irregular activities which could highlight
money laundering or suspicious behaviour around customer accounts. Inherently
manual in part, AML relies largely on clients providing physical evidence of
identity. Through automating the processes involved in the manual collection of
data, a client can be identified and then linked into an online data provider
to perform the necessary checks automatically. The processes, infrastructure
and technology are all available, so why was this allowed to happen?
Electronic
data management not only brings a joined-up process to AML, but also reduces
the time taken to perform previously onerous checks. It turns a time consuming
task, prone to error, into a background function taking minutes. Our work in
the wealth management space proves that compliance can be joined up and effective.
And as
if this time and cost saving wasn’t enough, there is then the small matter of avoiding
crippling fines for failing to prevent data misuse, and all at the click of a
button or two.
