The regulator of financial services
firms and financial markets in the UK, Financial Conduct Authority (FCA) has
fined the Ghana International Bank (GIB) £5.8 million pounds for breaching
anti-money laundering and counter-terrorist financing controls.
The
FCA in a decision notice today said the GIB failed to establish and maintain
appropriate and risk-sensitive policies and procedures; conduct adequate
enhanced due diligence when establishing new business relationships and conduct
adequate enhanced ongoing monitoring on transactions.
The
FCA said the breaches concerned the GIB's anti-money laundering and
counter-terrorist financing controls over its correspondent banking activities
in the period between January 1, 2012, and December 31, 2016, (the
"Relevant Period").
"During the Relevant Period, the
monetary value of funds flowing between GIB and its respondent banking
customers, net of transfers between customers' own accounts and fixed deposits,
totalled £9.5 billion," the decision read.
Discount on original fine
The
notice did not contain the detection of actual money laundering at the bank but
indicated that "the breaches created a significant risk that financial
crime would be facilitated, occasioned or otherwise occur".
The FCA added that the GIB had agreed
to resolve the matter and qualified for a 30 per cent discount.
"Were
it not for this discount, the Authority would have imposed a financial penalty
of £8,328,500 on GIB," the notice said.
"This
restriction remains in place. GIB continues to work with the FCA and an
independent expert to improve its financial crime controls," the FCA said.
Findings
In
a separate statement, the FCA said the GIB provided correspondent banking
services to overseas banks. This allowed the GIB to provide products and
services they would not otherwise be able to, including making payments in
different currencies and across borders.
The FCA requires banks to do extra
checks on their correspondent banking customers to reduce the higher risk of
money laundering and terrorist financing associated with the service.
"However,
between 1 January 2012 and 31 December 2016, GIB did not adequately perform the
additional checks required when it established relationships with the overseas
banks and failed to demonstrate it had assessed those banks’ anti-money
laundering controls," the statement said.
"GIB
also failed to undertake annual reviews of the information it held on the banks
it had a relationship with, failed to give staff adequate training on how to
scrutinise transactions properly and did not establish appropriate policies and
procedures for staff".
In December 2016, the FCA visited GIB
to review its financial crime controls.
As
a result of concerns identified during this visit, GIB voluntarily agreed not
to take on new customers.
"This
restriction remains in place. GIB continues to work with the FCA and an
independent expert to improve its financial crime controls," the statement
said.
No
evidence of actual laundering by GIB
The
statement said no evidence of actual money laundering was detected, though the
risk of money laundering as a result of these deficient systems was
significant.
"GIB
did not dispute the FCA’s findings and agreed to settle at the earliest
possible opportunity, which meant it qualified for a 30% discount. Otherwise,
the FCA would have imposed a financial penalty of £8,328,500".
Mark
Steward, Executive Director of Enforcement and Market Oversight at the FCA,
said: "Firms are gatekeepers of the financial system and have vital
obligations to ensure they are not used to facilitate or perpetrate financial
crime. These failings meant that GIB was unable to identify and assess the
risks posed by its correspondent bank customers and properly scrutinise
transactions worth £9.5 billion processed on their behalf during the relevant
period. Ensuring firms strengthen their anti-money laundering controls and
enforcing failures to comply remain high priorities for the FCA".
Read the FCA's Decision Notice here: https://bit.ly/3nbjnqX