The Financial Conduct Authority has fined EFG Private
Bank £4.2m for serious failures in its anti-money laundering controls which
spanned over three years. EFG is the UK private banking subsidiary of
Switzerland-based global private banking group EFGI Group.
It provides private
banking and wealth management services to high net worth individuals including
some from overseas jurisdictions recognised as presenting a higher risk of
money laundering and bribery and corruption.
At the end of 2011 around 400 of
EFG’s 3,342 customer accounts were deemed by the firm to present a higher risk
of money laundering or reputational risk, and of these 94 were held by
politically exposed persons.
An FSA investigation found that 17 out of 36
reviewed EFG customer files opened between December 2007 and January 2011
showed significant money laundering risks, but insufficient records of how those
risks had been mitigated. Of the 17 files, 13 related to allegations of
criminal activity or that the customer had been charged with criminal offences
including corruption and money laundering. In one account, EFG’s due diligence
found a prospective client had acquired their wealth through their father, who
was alleged to have links with organised crime, money laundering and murder.
There was inadequate information on file to explain how the bank concluded this
risk was acceptable. FCA head of enforcement and financial crime Tracey
McDermott says: “Banks are the first line of defence
to make sure that proceeds
of crime do not find their way into the UK. “In this case while EFG’s policies
looked good on paper, in practice it manifestly failed to ensure it was
addressing its anti-money laundering risks. “Poor implementation of its agreed
policies risked the bank handling the proceeds of crime. These failures merited
a strong penalty from the FCA.” The FSA fined Coutts & Co £8.8m in March 2012
for failing to establish effective anti-money laundering systems. It also fined
Habib Bank £525,000 in May 2012 for similar failings.
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