Habib is a privately owned Swiss bank with 12 branches in the UK and about 15,500 customers.
The FSA’s investigation found that between 15 December 2007 and 15 November 2010, Habib failed to establish and maintain adequate controls for assessing the level of money laundering risk posed by its customers.
In particular, Habib maintained a high-risk country list which excluded certain high-risk countries on the basis that it had group offices in them.
However, the FSA found that “Habib’s local knowledge of these countries did not negate the higher risk of money laundering they presented”.
The body also found that Habib failed to conduct adequate enhanced due diligence in relation to higher risk customers.
In two-thirds of the 68 customer files it reviewed, the FSA found one or more of the following significant failings:
• The account had been inappropriately classified as normal risk.
• The enhanced due diligence conducted was inadequate (in that insufficient information or supporting evidence had been gathered).
• The enhanced due diligence had not been conducted prior to transactions occurring on the account.
The FSA also fined Habib’s former money laundering reporting officer (MLRO) Syed Itrat Hussain £17,500 for failure to take reasonable care to establish and maintain adequate anti-money laundering (AML) systems and controls.
As MLRO, Hussain was responsible for oversight of Habib’s AML systems and controls, but failed to ensure that these were adequate. Hussain has now retired from the financial services industry.
FSA acting director of enforcement and financial crime Tracey McDermott said:
“Habib’s failings were unacceptable. Habib’s belief that local knowledge of a country through a group office mitigated the higher money laundering risk posed by that country was entirely misconceived.”