The Financial Conduct Authority has fined Standard Chartered Bank £102.2m for anti-money laundering (AML) breaches in "higher risk" areas of its business, in the second largest penalty of its kind ever imposed by the regulator.
FCA investigations found "serious and sustained shortcomings" in the bank's AML controls in its UK Correspondent Banking business between 2010 - 2013 and its branches in the United Arab Emirates between 2009 - 2014.
Under the Money Laundering Regulations 2007, Standard Chartered is required to establish and maintain appropriate and risk sensitive policies and procedures to reduce the risk of the bank being used to launder the proceeds of crime - something which the regulator said it had failed to do.
The FCA found the bank had also failed to ensure its UAE branches applied UK equivalent AML and counter-terrorist financing controls.
In one instance the FCA found an account had been opened with AED3m (£500,000) in cash in a suitcase, with little evidence the origin of the funds had been investigated.
Standard Chartered had also failed to collect "sufficient information" on a customer exporting a potentially military affiliated commercial product, which was exported to more than 75 countries including two jurisdictions where armed conflict was, or was likely to be, taking place.
In another case, the bank did not review due diligence on a customer despite repeated red flags, such as a blocked transaction from another bank.
Standard Chartered agreed to accept the FCA’s findings meaning it qualified for a 30 per cent discount, otherwise the regulator would have imposed a penalty of £145,947,500.
The FCA confirmed the US authorities have also taken action against the Standard Chartered group for "significant violations" of its sanctions laws and regulations.
Mark Steward, director of enforcement and market oversight at the FCA, said: "Standard Chartered’s oversight of its financial crime controls was narrow, slow and reactive.
"These breaches are especially serious because they occurred against a backdrop of heightened awareness within the broader, global community, as well as within the bank, and after receiving specific attention from the FCA, US agencies and other global bodies about these risks."
Mr Steward said Standard Chartered is now working to improve its AML controls to ensure all issues are fully addressed on a "global basis".
He added: "The FCA has taken into account Standard Chartered’s remediation work and its cooperation in assisting the FCA investigation, without which today’s financial penalty would have been even higher."
Mr Steward said the FCA had worked alongside international authorities during the investigation including the US Department of Justice and US Office of Foreign Assets Control.
He also acknowledged the UAE Central Bank, stating its commitment in the investigation had "demonstrated the fight against money laundering is a truly global one".
rachel.addison@ft.com
