FCA fines Commerzbank London over anti-money laundering failures - Thistle Initiatives

What has happened?

The FCA has fined Commerzbank’s London branch £37,805,400 for failing to put adequate anti-money laundering systems and controls in place between October 2012 and September 2017.

Commerzbank London was apparently aware of its 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. These weaknesses persisted during a period when the FCA was publishing guidance on steps firms could take to reduce financial crime risk and was taking enforcement action against a number of firms in relation to AML controls.

The FCA’s investigation identified failings in a number of areas, including the branch’s failure 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. Many of these clients were able to continue to transact with the branch due to the implementation of an exceptions process, which was not adequately controlled or overseen and which became ‘out of control’ by the end of 2016
  • Address long-standing weaknesses identified by the firm in its automated tool for monitoring money laundering risk on transactions for clients
  • Have adequate policies and procedures in place when undertaking customer due diligence on clients

What do you need to do?

There is a lengthy history of fines and other measures taken by the FCA in relation to firms’ AML systems and controls, recent examples of which include Barclays in 2015, Sonali Bank UK in 2016, Interactive Brokers UK in 2018 and Standard Chartered Bank in 2019, and firms should properly understand by now the regulator’s intolerant attitude to significant and long-lasting control weaknesses.

This attitude can be gauged by the requirement imposed on Commerzbank to undertake a significant remediation exercise to bring its AML controls into compliance and for a Skilled Person to test the effectiveness of these enhancements. The branch has also had to conduct an extensive look-back exercise to identify suspicious transactions during the period in question and has voluntarily implemented a wide-ranging business restriction which included temporarily stopping taking on new high-risk customers and suspending all new trade finance business activities.

How can we help you?

If you’d like to know more about how we can help with your financial crime arrangements or any other aspect of FCA compliance, our expert team is here to help. Contact us today on 0207 436 0630 – or email info@thistleinitiatives.co.uk.