Bank of Beirut (UK)

Release Date: 5th March 2015

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Summary

The Financial Conduct Authority (FCA) has fined Bank of Beirut (UK) Ltd £2.1 million and restricted it from acquiring new customers from high-risk jurisdictions for 126 days due to the bank’s repeated provision of misleading information about its financial crime systems and controls. Additionally, Anthony Wills, former compliance officer, and Michael Allin, internal auditor, were fined £19,600 and £9,900 respectively for failing to deal with the regulator in an open and cooperative manner.

Fined Entity: Bank of Beirut (UK) Ltd
Fines: £2.1 million
Restrictions: Prohibited from acquiring new high-risk jurisdiction customers for 126 days
Individual Fines: Anthony Wills (£19,600) and Michael Allin (£9,900)

Key Issues:

Misleading Information: Bank of Beirut provided false assurances to the FCA about the completion of required remedial actions.
Compliance Failures: Wills and Allin failed to manage the bank’s compliance effectively and provided misleading communications to the FCA.
Cultural Concerns: Identified during supervisory visits in 2010 and 2011, the bank’s culture did not sufficiently address the risk of being used for financial crime.

FCA’s Position:

Georgina Philippou, Acting Director of Enforcement and Market Oversight at the FCA, emphasized the importance of accurate information from firms to ensure consumer protection and market integrity. The misleading information from Bank of Beirut and its employees significantly hindered the FCA’s regulatory effectiveness and increased the risk of financial crime.

Compliance Actions and Failures:

Anthony Wills: Handled communications with the FCA and dismissed concerns about compliance.
Michael Allin: Provided false assurances regarding improvements to the bank’s processes.
Senior Management Influence: Wills and Allin were influenced by senior management but were expected to resist undue pressure and ensure compliance.

Outcomes and Cooperation:

Early Settlement: Bank of Beirut, Wills, and Allin settled early, receiving a 30% discount on their fines.
Penalties Without Discount: Without early settlement, the bank’s fine would have been £3 million, and the restriction would have lasted 180 days. Wills and Allin would have faced fines of £28,000 and £14,100 respectively.

Key Takeaways for Other Firms:

Honest Communication: Ensure accurate and transparent communication with regulators.
Robust Compliance Systems: Implement effective financial crime controls and risk management systems.
Resist Undue Pressure: Compliance officers and internal auditors must maintain integrity and resist undue influence from senior management.
Prompt Remediation: Address regulatory concerns promptly and accurately to avoid severe penalties and restrictions.

This case underscores the FCA’s commitment to enforcing regulatory compliance and the severe consequences for firms and individuals who fail to meet these standards.