Commerzbank Fined Over Loose Anti-Money Laundering System
The UK’s Financial Conduct Authority (FCA) has fined the
London branch of Frankfurt-based Commerzbank 37.8 million British pounds
(US$47.3 million) for it’s failure to implement adequate anti-money laundering
(AML) controls between October 2012 and September 2017.
“Commerzbank London 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,” the financial watchdog
said in a statement on Wednesday.
In 2015 alone, Commerzbank London identified that 40
high-risk countries were missing from its transaction monitoring software, and
that 1,110 high-risk clients had not been added, according to the statement.
The FCA also said that these weaknesses persisted even
during a period in which the authority was publishing guidance on steps firms
should take to reduce the risk of financial crime, in addition to pursuing enforcement action against a number of firms
over failure to implement AML controls.
In its 50-page document the FCA stressed that Commerzbank,
Germany’s second-largest lender, did not “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.”
At the same time, the bank failed to fix weaknesses in an
automated tool for monitoring transactions for money-laundering risks, despite
FCA warnings.
“Commerzbank London’s failings over several years created a
significant risk that financial and other crime might be undetected,” FCA
Executive Director of Enforcement and Market Oversight, Mark Steward, said.
He added that companies should recognize that AML controls
are “vitally important to the integrity of the UK financial system.”
The original fine was even higher, totaling 54 million
pounds ($67.7 million), but the bank agreed to resolve the matter at an early
stage of the investigation and therefore qualified for a 30% discount,
according to the FCA.
The watchdog also said that Commerzbank London has
undertaken significant remediation measures to bring its AML controls into
compliance, and that it has also conducted an “extensive look-back exercise to
identify suspicious transactions during the period in question.”
The bank has further introduced new business restrictions,
according to which it will temporarily stop taking new high-risk customers and
suspend “new trade finance business activities.”
The sum Commerzbank London has to pay is modest in
comparison with what the US Commerzbank’s branch had to pay more than five
years ago.
In March 2015 the bank agreed to pay $1.45 billion to US
authorities to resolve allegations that it had knowingly moved money through
the US financial system on behalf of black-listed entities, including Iran,
Sudan and other countries under US sanctions.
Back then, the US Commerzbank branch was accused of engaging
“in criminal conduct using numerous schemes designed to conceal the true nature
of the illicit transactions from US regulators.”
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