The Financial Conduct Authority (FCA) has announced yesterday that it has fined Standard Chartered Bank £102,163,200 for Anti-Money Laundering (AML) breaches. This is the second financial penalty for AML controls failings in less than 5 moths imposed by the regulator. In December 2018, the FCA fined the former Chief Executive Officer of Sonali Bank (UK) Limited (SBUK) £76,400 for being knowingly concerned in a breach by SBUK of its obligations to maintain effective anti-money laundering (AML) systems.
Mark Steward, Director of Enforcement and Market Oversight at the FCA, commented:
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.
Standard Chartered is working to improve its AML controls to ensure all issues are fully addressed on a global basis. The FCA has taken into account Standard Chartered’s remediation work and its cooperation in assisting the FCA investigation, without which today’s financial penalty would have been even higher.
The FCA has worked closely and extensively with a number of UK and overseas agencies including the US Department of Justice, New York County District Attorney, US Board of Governors of the Federal Reserve, New York State Department of Financial Services and US Office of Foreign Assets Control. I would also like to acknowledge the assistance of the UAE Central Bank whose commitment has demonstrated the fight against money laundering is a truly global one, as it needs to be,” he concluded.
The regulator reported significant shortcomings in Standard Chartered’s own internal assessments of the adequacy of its AML controls, including:
- 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; and
- 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.
Standard Chartered did not dispute, thus qualified for a 30% discount. Otherwise, the regulator would have imposed a £145,947,500 fine.