FSA fines Abbey £2.3 million for money laundering failures

FSA fines Abbey £2.3 million for money laundering failures

The Financial Services Authority (FSA) has fined banking group Abbey National £2 million for failing to comply with anti-money laundering (AML) regulations at its retail banking division, and a further £320,000 for breaches at its asset managers business.

The FSA investigation found that Abbey breached AML and Know Your Customer (KYC) regulations at its retail banking division between December 2001 and April 2003.

The list of failings included relying on self-certification of AML compliance by branches, a lack of monitoring, and the failure to provide key management information to the Money Laundering Reporting Officer (MLRO). The bank also failed to ensure that internal suspicious activity reports (Sars) were reported to the National Criminal Intelligence Service (NCIS).

At its asset managers division, Abbey did not comply with rules stated in the FSA's Senior Management Arrangements, Systems and Controls Sourcebook (SYSC) between December 2001 and June 2003, and repeatedly failed to address any shortcomings identified.

Furthermore, the regulator says the lack of compliance measures in place may have contributed to 'misconduct' by a senior fund manager at the division, which resulted in Abbey paying out £300,000 in compensation to affected clients.

The FSA says both cases reflected wider control failings, including inadequate monitoring of regulatory risks, across the Abbey National group over a prolonged period.

Andrew Procter, FSA director of enforcement, adds: "The failure by Abbey National to monitor compliance with FSA Money Laundering Rules demonstrated a marked lack of regard for its regulatory obligations."

In a statement, Abbey says it will not be appealing against the fines: "There was no evidence of money laundering taking place although the company fully acknowledges that its methods for checking customer identification were inadequate, and that the company was not reporting suspicious activity on a timely basis."

News of the fine comes as the UK's Association of Private Client Investment Managers (Apcims), releases the results of a membership survey which found a clear majority in favour of a national identity card for AML checks. More than half of firms who responded also said that anti-money laundering checks had been their biggest compliance issue so far this year.

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