The UK watchdog has punished a bank and two of its senior figures for giving misleading information about how it was tackling the risk of being used for financial crime.

The UK financial regulator has fined Bank of Beirut (UK) £2.1 million ($3.2 million), and stopped it from acquiring new customers from high-risk jurisdictions for 126 days, saying the firm repeatedly provided the watchdog with misleading details after being required to deal with concerns about its financial crime protections.

In addition, the Financial Conduct Authority fined two approved persons at the bank, it said in a statement yesterday.  

Anthony Wills, the former compliance officer at Bank of Beirut, and Michael Allin, the internal auditor, have been fined £19,600 and £9,900, respectively. Wills and Allin failed to deal with the regulator in an open and cooperative way when responding to queries about the actions taken to mitigate financial crime risk, the FCA statement said.  

“It is essential to consumer protection, market integrity and the prevention of financial crime that we can rely on firms giving us the right information at the right time. Bank of Beirut’s failings impeded us and left it open to the risk that it might be used for financial crime,” Georgina Philippou, acting director of enforcement and market oversight, said.

“Equally worrying was the fact that Wills and Allin provided a number of misleading communications to us, which is a serious breach of their responsibilities as approved persons. We are reliant on compliance officers and internal audit to act as a first line of defence, to support effective regulation at firms and to show backbone even when challenged by their colleagues,” she continued.

The FCA said it became concerned about what was happening at the bank after it visited the firm in 2010 and 2011. It was concerned that not enough attention was paid to the risk that the firm was being used for financial crime. It said the bank repeatedly stated it had remedied the position, when in fact it hadn’t.

Wills and Allin were responsible for addressing a number of the actions required of the firm. Wills handled most of the communication between the firm and the regulator and he sought to dismiss concerns that the Bank of Beirut was not properly implementing the required changes. Allin provided false assurance that the improvements to the firm’s processes had been made, the FCA said.

“The FCA recognises that both Wills and Allin were influenced by senior management. However, the FCA relied on the word of Wills and Allin to gain comfort that the changes to the firm’s processes had been completed. Given Wills and Allin’s position as approved persons, they should have resisted their senior management in these circumstances,” the statement said.

The bank settled with the FCA at an early stage of the investigation. Had it not done so, it would have faced a fine of £3 million and a restriction of 180 days. Wills and Allin also settled at the first opportunity; had they not they would have faced financial penalties of £28,000 and £14,100 respectively, the FCA added.