Release Date: 11th January 2023
To access the original FCA document, click here.
Summary
Al Rayan Bank PLC has been fined £4,023,600 by the Financial Conduct Authority (FCA) for significant failings in its anti-money laundering (AML) systems and controls between April 2015 and November 2017. The fine was reduced by 30% from an initial £5,748,000 due to Al Rayan’s agreement to resolve the matter early.
Reasons for the FCA Fine:
- Inadequate AML Policies and Procedures: Al Rayan failed to establish and maintain effective AML policies, particularly regarding enhanced due diligence (EDD) and the verification of high-risk customers’ sources of wealth and funds.
- Poor Handling of Cash Deposits: The bank accepted £22.74 million in high-risk cash deposits without adequate scrutiny or sufficient documentation, which increased the risk of financial crime.
- Deficient Customer Due Diligence (CDD): There were significant lapses in keeping customer due diligence documents up-to-date and ensuring ongoing monitoring of high-risk customers.
- Training and Internal Controls Failures: The bank did not provide adequate training to staff on AML procedures, leading to improper handling of large cash deposits and non-compliance with tipping off rules.
- Lack of Remediation: Despite being made aware of its AML deficiencies by the FCA in 2015 and 2017, Al Rayan failed to take adequate steps to address these issues.
Key Takeaways for Other Firms:
- Implement Robust AML Controls: Establish and maintain comprehensive, risk-sensitive AML policies and procedures to detect and prevent money laundering and terrorist financing.
- Ensure Effective Customer Due Diligence: Apply thorough due diligence and enhanced monitoring, especially for high-risk customers, and keep CDD documents up-to-date.
- Provide Adequate Staff Training: Regularly train staff on AML regulations, the handling of high-risk transactions, and compliance with all relevant laws and procedures.
- Conduct Regular Internal Audits: Perform frequent audits of AML systems and controls to ensure they are functioning effectively and make necessary improvements promptly.
- Respond to Regulatory Warnings: Take immediate action to rectify deficiencies identified by regulatory authorities and follow through on remediation plans.
Conclusion
The FCA’s fine against Al Rayan Bank PLC underscores the importance of robust AML systems and controls. Financial institutions must ensure that they have effective measures in place to manage and mitigate financial crime risks, and must respond promptly to regulatory feedback to avoid similar penalties.
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