The Financial Services Authority (FSA) has fined wealth manager and private bank Coutts & Co £8.75m over anti-money laundering failings.
Coutts was fined for “serious, systemic” failings that were allowed to persist for almost three years, and exposed it to “an unacceptable risk of Coutts handling the proceeds of crime”.
The regulator says Coutts had failed “to take reasonable care to establish and maintain effective anti-money laundering systems and controls relating to high risk customers including politically exposed persons”.
The FSA visited Coutts in 2010, identifying issues with the controls, while not applying “an appropriate level of scrutiny and challenge”.
Tracey McDermott, acting director of enforcement and financial crime at the FSA, says: “Coutts’ failings were significant, widespread and unacceptable.
“Its conduct fell well below the standards we expect and the size of the financial penalty demonstrates how seriously we view its failures.”
McDermott says: “Coutts was expanding its customer base which increased the number of high risk customer relationships.
“The regulatory environment in relation to financial crime had also changed. It is therefore particularly disappointing that Coutts failed to take appropriate steps to manage its anti-money laundering risks.
She adds: “This penalty should serve as a warning to other firms that, not only should they ensure they constantly review and adapt their controls to changing financial crime risks within their businesses, but that they must also make changes to reflect changing regulatory or other legal standards.”
Royal Bank of Scotland Group-owned Coutts agreed to settle at an early stage qualifying for a 30% discount on the original £12.5m penalty.