RegulationMar 26 2012

Coutts lands fine for laundering violations

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BySimoney Girard

According to a statement from the City watchdog, the “failings at Coutts were serious, systemic and were allowed to persist for almost three years. They resulted in an unacceptable risk of Coutts handling the proceeds of crime.”

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.