The UK’s financial regulator has fined Commerzbank’s London branch nearly £38 million (US$47 million) over anti-money laundering (AML) failures, including an ‘out of control’ customer due diligence process.
Since the FCA’s intervention, the German bank has suspended all new trade finance business activities.
The Financial Conduct Authority (FCA) said Commerzbank had failed to put adequate AML systems and controls in place between October 2012 and September 2017, despite three separate warnings from the regulator.
Commerzbank was aware of these weaknesses and failed to take reasonable and effective steps to fix them despite the FCA raising specific concerns about them in 2012, 2015 and 2017 according to the authority
It said these weaknesses also persisted during a period when the FCA was publishing guidance on steps firms could take to reduce financial crime risk as well as taking enforcement action against a number of firms in relation to AML controls. Despite these clear warnings, the failures continued.
Due diligence overdue
The FCA found that Commerzbank failed to conduct timely periodic due diligence on its clients, which resulted in a significant number of existing clients not being subject to timely know-your-client checks. By 1 March 2017, the FCA says 1,772 clients were overdue updated due diligence checks.
The bank also failed to address long-standing weaknesses in its automated tool for monitoring money laundering risk on transactions for clients according to the FCA.
It said the bank also failed to have adequate policies and procedures in place when undertaking customer due diligence on clients.
No new trade finance
Since the FCA brought these failures to the attention of Commerzbank, it has now completed a significant remediation exercise to bring its AML controls into compliance and conducted an extensive look-back exercise to identify suspicious transactions during the period in question.
Commerzbank has also voluntarily implemented wide-ranging business restrictions, which included temporarily stopping taking on new high-risk customers and suspending all new trade finance business activities.
Categories: Trade Based Financial crimes News