In October 2010, the FSA visited Coutts, the wealth division of RBS, as part of its thematic review into banks’ management of high money-laundering risk situations. Following that visit, the FSA’s investigation identified Coutts did not apply robust controls when starting relationships with high-risk customers and did not consistently apply appropriate monitoring of those high-risk relationships. According to the statement, the FSA identified deficiencies in nearly three-quarters of the PEP and high-risk customer files reviewed. Specifically, in one or more of each inadequate file Coutts failed to:
■ gather sufficient information to establish the source of wealth and source of funds of its prospective PEP and other high-risk customers
■ identify and/or assess adverse intelligence about prospective and existing high risk customers properly and take appropriate steps in relation to such intelligence
■ keep the information held on its existing PEP and other high-risk customers up-to-date
■ scrutinise transactions made through PEP and other high-risk customer accounts appropriately.
As a result of the FSA’s review, improvements and recommendations have already been, or are being, implemented. These include significant remedial amendments to PEP and other high-risk customer files to ensure that appropriate due diligence information about Coutts’ customers has been assessed and recorded.
Coutts agreed to settle at an early stage so qualified for a 30 per cent discount. Were it not for this discount, the FSA would have imposed a financial penalty of £12.5m.