The UK regulator continued to flex its muscles yesterday - this time against private banks in particular - levelling accusations of poor due diligence checks on high-risk accounts.

Having carried out its thematic review of money laundering checks with persons suspected of links to crime or political misappropriation of funds, the Financial Services Authority concluded in a statement that there were serious failings in some corners of the industry. It is believed that the regulator is planning enforcement action against two firms.

In one startling example of such a failure, one private bank is said to have accepted a new client’s money despite her husband being wanted by Interpol for fraud. Another example being cited is that of the wife of a former politician who was suspected of stealing from aid funds being allowed to open an account.

Anti-money laundering has been high on the agenda in recent times due to the so-called “Jasmine Revolution” in North Africa and the Middle East, and the concomitant flight of corrupt politicians and their assets abroad. Private banks around the world are naturally on high alert for any incoming funds which may be the result of corruption.

It is not just the FSA which is flagging up private banks’ failings in this regard. In a recent report, the client forum MyPrivateBanking in large part blamed banks and wealth managers for the fact that the vast majority of the ill-gotten gains of corrupt politicians are never repatriated.

MyPrivateBanking said that all too often KYC and AML due diligence checks resemble “going through the motions” and argued that although tick-box exercises are carried out there is a serious lack of further investigation even when suspicions have been raised.