Compliance

Coutts & Co Hong Kong Branch Fined For AML Failings

Tom Burroughes, Group Editor, 12 April 2017

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The HKMA has acted against Coutts & Co AG, Hong Kong branch, for regulatory breaches around laws designed to stop money launderers and terrorist financing.

The Hong Kong Monetary Authority, the jurisdiction’s central bank and regulator, has fined Coutts & Co AG, Hong Kong Branch a total of HK$7 million (around $900,000) for breaking anti-money laundering and anti-terrorist finance rules.

The punishment was imposed after the HKMA said that its probe into the bank found that, from April 2012 to June 2015 showed that Coutts Hong Kong had committed five regulatory breaches. 

In particular, the investigation found that Coutts Hong Kong had not set up and kept effective procedures against determining if clients or beneficial owners of its clients were politically exposed persons. The regulator said it also found the bank had not identified PEPs despite relevant public information and had not quickly followed up alerts from a commercially available database.

The authority said it needed to send out a clear deterrent message about the importance of such controls, and gave credit to the bank for engaging an external consultant to carry out “an extensive review of its policies and procedures and remediation of client files”. Coutts Hong Kong has also “taken positive and intensive remedial measures to address the deficiencies identified by the HKMA; and Coutts Hong Kong co-operated with the HKMA during the investigation”.

“PEPs are individuals whose prominent position in public life may make them vulnerable to corruption and they therefore pose a higher risk of money laundering. Banks are expected to have in place AML/CTF systems and controls that are commensurate with the risks presented and the HKMA will take enforcement action where appropriate to reinforce this message,” Meena Datwani, executive director (enforcement and AML) of the HKMA, said.

In 2015, part of Coutts International’s client base – but not its legal entity – was bought by Union Bancaire Privée – the Geneva-based bank, from Royal Bank of Scotland. UBP has stated that it did not take on any of Coutts’ legal liabilities.

As previously reported by this publication, in February this year, Coutts was fined SFr6.5 million ($6.6 million) by the Swiss regulator FINMA for breaching money laundering regulations in its relationships with scandal-hit Malaysian sovereign wealth fund 1MDB. (For more details on that case, click here.)

 

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