For the first time, the UK’s financial regulator the Financial Services Authority has fined an individual for breaking anti-money laundering...

For the first time, the UK’s financial regulator the Financial Services Authority has fined an individual for breaking anti-money laundering rules. Ram Melwani, managing director of Investment Services UK, an emerging market bond broker has been fined £30,000 ($52,283). The company itself has been fined £175,000. According to the FSA, Mr Melwani “failed to act with due care, skill and diligence, failed to ensure his firm complied with AML requirements and was knowingly concerned in the actions taken by ISUK.” The company’s clients are seen by the FSA as “corporate vehicles” incorporated in offshore jurisdictions that have anti-money laundering regulations more lax than those in the UK. In helping clients set up accounts with banks to take part in bond trades, ISUK did not provide information to the bank for them to assess the level of risk to which it would be exposed. A number of ISUK’s clients were members of Mr Melwani’s family and for this reason the company did not implement procedures for verifying their identity or the source of their funds. The FSA found that ISUK did not implement any formal procedures for identifying individuals, did not provide AML training for staff, and did not apply for FSA approval of its Money Laundering Reporting Officer. ”As a result of ISUK's actions, a small number of individuals were able to operate anonymous accounts and over £8 million entered the UK financial system without the bank knowing the identity of its customers or the source of their funds,” said the FSA in a statement.