Banks found to be putting profits before risk in FSA money laundering review

Banks found to be putting profits before risk in FSA money laundering review

The Financial Services Authority is ready to launch a crack-down on bank anti-money laundering practices after finding serious weaknesses in banks' systems and controls and a willingness to turn a blind eye to profitable business relationships with high-risk customers and regimes.

Around three quarters of the bank's reviewed by the FSA - including the majority of major banks - failed to take adequate measures to establish the legitimacy of the source of their customers' wealth and the source of the funds to be used in the business relationship.

The watchdog says that so far two banks have been referred to enforcement following the identification of apparent "serious weaknesses" in their systems and controls, but that the problems appeared to be endemic.

"Despite changes in the legal and regulatory framework a number of the weaknesses identified during this review are the same as, or similar to, those identified in the FSA report of March 2001 covering how banks in the UK handled accounts linked to the former Nigerian military leader, General Sani Abacha," says the FSA. "We are concerned there has been insufficient improvement in banks' AML systems and controls during this period."

The FSA says that some banks appear to be willing to flout the rules and enter into high-risk business relationships when there are potentially large profits to be made.

As a result, states the regulator, "it is likely that some banks are handling the proceeds of corruption or other financial crime".

The FSA says it intends to use its enforcement powers to strengthen AML controls and deter banks from putting profits before risk.

Read the full review:

Download the document now 986.3 kb (PDF File)

Comments: (0)