Release Date: 10th January 2023
To access the original FCA document, click here.
Summary
Guaranty Trust Bank (UK) Limited (GT Bank) has been fined £7,671,800 by the Financial Conduct Authority (FCA) for failing to maintain adequate anti-money laundering (AML) systems and controls from October 2014 to July 2019. The fine was reduced by 30% from an initial £10,959,700 due to GT Bank’s agreement to settle the matter early.
Reasons for the FCA Fine:
- Inadequate AML Systems and Controls: GT Bank failed to implement effective, risk-based AML systems to prevent and detect money laundering and terrorist financing.
- Recurring Issues: This is the second time GT Bank has been fined for similar issues; the first instance occurred in 2013 with a penalty of £525,000.
- Senior Management Failures: The bank’s senior management did not develop or implement an effective plan to address the weaknesses in its AML framework, despite repeated warnings and recommendations from internal and external reviews, including those by the FCA.
- Specific Failings:
- Failure to carry out adequate customer risk assessments and due diligence.
- Insufficient enhanced due diligence for higher-risk customers.
- Inadequate monitoring of customer transactions and relationships.
- Poor documentation and verification of customers’ sources of funds and wealth.
- Lack of effective AML training for staff.
- An ineffective culture regarding AML compliance.
Key Takeaways for Other Firms:
- Robust AML Framework: Establish and maintain comprehensive, risk-sensitive AML policies and procedures.
- Regular Risk Assessments: Conduct thorough and ongoing risk assessments for all customers, especially high-risk ones.
- Enhanced Due Diligence: Apply enhanced due diligence and ongoing monitoring for higher-risk customers and transactions.
- Effective Training: Provide regular and detailed AML training for all relevant staff.
- Prompt Remediation: Act swiftly to rectify any identified deficiencies in AML controls and ensure continuous improvement.
- Senior Management Accountability: Ensure senior management takes an active role in formulating and implementing effective AML strategies.
Conclusion
The FCA’s significant fine against GT Bank highlights the critical importance of maintaining robust AML systems and controls. Financial institutions must ensure that they have effective measures in place to prevent and detect money laundering and terrorist financing, and they must respond promptly and thoroughly to regulatory feedback to avoid severe penalties and reputational damage.
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