Compliance

UK Regulator Punishes EFG Private Bank For AML Control Shortcomings

Tom Burroughes, Group Editor, London, 24 April 2013

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A UK regulator has fined EFG Private Bank for failing to maintain effective anti-money laundering controls, it said today, adding to a list of firms that have been punished for such transgressions.

A UK regulator has fined EFG Private Bank, the UK banking subsidiary
of Switzerland's EFG International, a total of £4.2 million ($6.41 million) for
failing to maintain effective anti-money laundering controls, it said today,
adding to a list of firms that have been punished for such transgressions.

EFG Private Bank said no money laundering activity has been
proven to have taken place.

The fine was imposed by the recently-formed Financial
Conduct Authority on the firm for “failing to take reasonable care to establish
and maintain effective anti-money laundering controls for high risk customers. The
failings were serious and lasted for more than three years,” the FCA said in a
statement.

The fine adds to punishments meted out by regulators on
firms for AML systems failures and oversights in recent months. Other firms
punished include HSBC, Standard Chartered and Coutts. (To see a full list of
recent regulatory actions against firms, click here.)

“This is the first anti-money laundering fine issued by the FCA at a
time when its approach to enforcement is under intense scrutiny. The FCA
seems
to show no change in approach from its predecessor, the FSA, in
enforcing a tough stance on anti-money laundering. It remains to be seen
whether the FCA will focus on any particular products, and how open the
FCA will be to engaging in a constructive dialogue
with market participants," Jeremy Hill, a London based partner at law firm Debevoise & Plimpton, said.

At the end of 2011 around 400 of EFG’s 3,342 customer
accounts were deemed by the firm to present a higher risk of money laundering
or reputational risk, and of these 94 were held by politically exposed persons,
the FCA said.

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