FCA fines Commerzbank £37.8m over AML failings

Source: IBS Intelligence 2020-06-18

The UK’s Financial Conduct Authority (FCA) has fined Commerzbank AG (London Branch) £37,805,400 for failing to put adequate anti-money laundering (AML) systems and controls in place between October 2012 and September 2017. The fine comes after the FCA said that the bank had failed to act on concerns raised in 2012, 2015 and 2017 by the regulator.

These weaknesses also persisted during a period when the FCA was publishing guidance on steps firms could take to reduce financial crime risk as well as taking enforcement action against a number of firms in relation to AML controls. Despite these clear warnings, the FCA said the failures continued.

FCA Executive Director of Enforcement and Market Oversight, Mark Steward, said: “Commerzbank London’s failings over several years created a significant risk that financial and other crime might be undetected. Firms should recognise that AML controls are vitally important to the integrity of the UK financial system.”

The FCA’s investigation identified failings in a number of areas, including Commerzbank London’s failure to:

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:
Address long-standing weaknesses in its automated tool for monitoring money laundering risk on transactions for clients; and
To have adequate policies and procedures in place when undertaking customer due diligence on clients.

Commerzbank London has undertaken a significant remediation exercise to bring its AML controls into compliance and has also conducted an extensive look-back exercise to identify suspicious transactions during the period in question. The bank also voluntarily implemented a wide-ranging business restriction, which included temporarily stopping taking on new high-risk customers and suspending all new trade finance business activities.

As a result of Commerzbank London agreeing to resolve the matter at an early stage of the investigation, it qualified for a 30% discount. Without the discount, the financial penalty would have been £54,007,800.

Nick Bayley, Managing Director and Head of UK Regulatory Consulting at Duff & Phelps said: “This action by the FCA reinforces the level of work required by firms to meet their AML obligations. The UK regulator’s continued concern about firms’ money laundering control is a focus we see mirrored across all the other major financial centres in the world.

“Regulatory penalties require a devotion of significant management time and financial resources over many years to remediate the issues raised. This ‘hidden cost’ is something one can often forget when looking just at the fine amounts imposed by the regulator. It is important that firms do not underestimate the level of work required to meet AML regulatory obligations.”

FCA

FCA fines Commerzbank £37.8m over AML failings

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