In a decision notice published by the regulator last week (October 14), the regulator said it had found “serious shortcomings” in the bank’s anti-money laundering policies and procedures between June 2014 and July 2017.
The lender offers residential and buy-to-let loans, as well as Sharia-compliant savings products. It focuses on helping expats and international buyers secure property in the UK.
During the three-year period stated by the regulator, Gatehouse’s customers and investors “primarily originated” from jurisdictions which posed higher money laundering risks and some were “politically exposed persons”.
The FCA said the lender breached four parts of the Money Laundering Regulations 2007. This included basic customer due diligence, checks to avoid money laundering and terrorist financing, ongoing monitoring to reflect current levels of financial risk, and the provision of compliance resources.
On the last point, the regulator said the lender was “under-resourced” during this period, and that its three lines of defence model “did not operate effectively” which led to staff not appropriately screening customers.
The FCA cited one example where Gatehouse opened an account for a Kuwait-based company so it could pool funds for a real estate investment.
The lender, the FCA said, relied on the company to do due diligence on its customers, a large number of whom were “high risk, high net worth” customers.
The regulator found Gatehouse did not require the Middle Eastern company to collect information regarding the source of these customers’ wealth, which is required under UK money laundering rules. The bank accepted $62mn (£55mn) from this company.
The final fine charged to the lender was discounted by 30 per cent. The FCA said it had taken into account the fact the lender was reviewing and investing in its anti-money laundering systems during this period. Otherwise, the fine would have been £2.26mn.
Gatehouse, which is headquartered in Moorgate, was authorised by the FCA in April 2008. In 2013, an internal audit had found Gatehouse relied on “self-certification” of wealth and funds by customers rather than undertaking independent verification.
In June 2014, Gatehouse brought the concerns revealed by the 2013 internal audit to the attention of the FCA.
Customers of Gatehouse’s real estate business were generally special purpose vehicles incorporated in foreign jurisdictions like Jersey and the Cayman Islands. While its investor customers predominantly originated from Gulf Cooperation Council countries, primarily Kuwait.
The Kuwait-based business Gatehouse failed to do checks on, which was not named by the FCA, introduced “many” customers to the lender - something the regulator discovered upon further investigation. This meant the lender did not have direct relationships with certain customers.
From mid-2016 to mid-2017, the FCA said Gatehouse established and implemented “a new suite” of anti-money laundering and financial crime-related policies and procedures to address the deficiencies.
ruby.hinchliffe@ft.com
