The FCA has fined Commerzbank London £37,805,400 for its failure to put adequate anti-money laundering systems and controls in place between October 2012 and September 2017.
According to the regulator, the bank 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.
In addition, the FCA said that the problems persisted even when the FCA was publishing guidance on the steps firms could take to reduce financial crime risk. “Despite these clear warnings, the failures continued”, it said.
The FCA’s investigation identified failings in a number of areas, including its failure to conduct “timely” periodic due diligence on its clients.
According to the regulator, by 1 March 2017, 1,772 clients were overdue their updated due diligence checks
In addition, the bank failed to address “long-standing weaknesses” in its automated tool for monitoring money laundering risk on transactions for clients.
In 2015, for example, Commerzbank London identified that 40 high-risk countries were missing, and 1,110 high-risk clients had not been added to the transaction monitoring tool.
It also failed to have the “adequate” policies and procedures in place when undertaking customer due diligence on clients.
Commerzbank therefore breached Principle 3 of the FCA’s Principles for Businesses, which requires firms to have adequate risk management systems in place.
Commerzbank London has now undertaken a “significant remediation exercise” to be compliant with AML controls, and is looking to identify suspicious transactions during the period in question.
According to the FCA, because it has agreed to “resolve the matter at an early stage of the investigation”, it qualifies for a 30% discount. Without the discount, the financial penalty would have been £54,007,800.
FCA executive director of enforcement and market oversight, Mark Steward, said: “Commerzbank London’s failings over several years created a significant risk that financial and other crime might be undetected.
“Firms should recognise that AML controls are vitally important to the integrity of the UK financial system.”