FSA fines Bank of Scotland £1.25m over money laundering checks

FSA fines Bank of Scotland £1.25m over money laundering checks

The UK's Financial Services Authority (FSA) has fined the Bank of Scotland (BoS), part of the HBOS group, £1.25 million for failing to keep proper records of customer identification as required by its money laundering regulations.

FSA says weaknesses in the bank's record keeping systems and controls were found across its retail, corporate and business banking divisions.

In over half of the sample of accounts tested in late 2002, BoS had failed to retain either a copy of the customer identification evidence or a record of where this evidence could be obtained. These failings were made worse by BoS' inability to determine the areas in which the breakdown in its record keeping systems had occurred.

In a statement, BoS says it accepts the FSA's final notice that the storage and retrieval of its customer identification records was not always in accordance with the appropriate regulations and that it regretted the error.

BoS insists that there is no evidence of any money laundering at the bank or of any customers having been adversely affected by the problem.

The FSA says BoS promptly implemented a remedial action plan across the whole of the HBOS Group after the failings were discovered. This caused compliance rates to improve significantly from January 2003.

Andrew Procter, FSA director of enforcement, says: "The size of the fine demonstrates that failure by firms to put in place and maintain effective systems and controls will be dealt with severely by the FSA."

The action against HBOS follows a £2.3 million pound fine levied in December by the watchdog against Abbey National for money laundering failings.

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