Standard bank fined £7.6m by FCA


Britain Standard Chartered

The UK arm of South Africa's Standard Bank has been fined £7.6 million by the City regulator for breaching rules that guard against money laundering linked to corrupt foreign officials or politicians.

A review by the Financial Conduct Authority (FCA) found "serious weaknesses" in the procedures of the bank, whose parent group has extensive operations in 18 African countries and others in 13 other states.

It said these were "particularly serious" because Standard provided loans and other services to a significant number of corporate customers from countries where there was recognised to be a higher risk of money laundering.

"The weaknesses in Standard Bank's AML (anti-money laundering) systems and controls resulted in an unacceptable risk of Standard Bank being used to launder the proceeds of crime," the FCA said.

Tracey McDermott, director of enforcement and financial crime, said: "Banks are in the front line in the fight against money laundering.

"If they accept business from high-risk customers they must have effective systems, controls and practices in place to manage that risk. Standard Bank clearly failed in this respect."

The failings related to the bank's dealings with companies linked to "politically exposed persons" (PEPs).

These are individuals who are, or have recently been "entrusted with a prominent public function" outside the UK, or their close relatives or associates.

Guidance by the Financial Action Task Force, a global body, says many "are in positions that potentially can be abused for the purpose of committing money laundering offences" as well as corruption, bribery and terrorist financing.

The FCA found that between December 2007 and July 2011, Standard "failed to take reasonable care" to ensure all aspects of its money laundering policies were applied appropriately and consistently to corporate customers connected to PEPs.

During the period, Standard had business relationships with 5,339 corporate customers, of which 282 were linked to one or more PEPs.

After a review of 48 customer files, the FCA found the bank did not consistently carry out enhanced checks or monitoring of customers that are supposed to be applied when they are connected to such figures, such as through a directorship or shareholding.

The regulator said the bank had cooperated with the investigation and "taken significant steps at significant cost towards remediating the issues identified" including calling in consultants.

It said Standard settled at an early stage of the probe resulting in a 30% discount on a potential fine of £10.9 million.

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