The bank is no longer allowed to accept deposits for 168 days from new customers and has been fined £3.25m.
The regulator said despite warnings about serious weaknesses in its AML controls, SBUK failed to maintain adequate AML systems between August 2010 and July 2014.
Steven Smith, the bank’s former money laundering reporting officer (MLRO), has been fined £17,900 and banned from performing similar function at other firms.
Sonali Bank is majority share-owned by the Bangladeshi Government and 49% by Sonali Bank based in Bangladesh.
Mark Steward, director of enforcement and market oversight at the FCA, said: “Fighting money laundering is an issue of extreme international importance and ensuring that AML controls are effective and viewed as important throughout the business are fundamental obligations of all regulated firms.”
“There is an abundance of guidance for firms on how to comply with AML and financial crime requirements and no excuse for failing to follow it. The FCA will not hesitate to take action against firms and senior individuals who fall short of our standards. As in this case, such action may include using our powers to restrict a firm’s continuing business.”
The FCA found serious and systemic weaknesses affected almost all levels of its AML control and governance structure, including its senior management team, its money laundering reporting function, the oversight of its branches and its AML policies and procedures.
While under FCA investigation, SBUK also breached Principle 11 which is about dealing with regulators in an open and co-operative way, by failing to notify the FCA of an allegation of significant fraud.
Despite repeated warnings from SBUK’s internal auditors, Smith:
• failed to put in place appropriate AML monitoring arrangements;
• failed to identify serious weaknesses in operational controls and a lack of appropriate knowledge among staff members;
• reassured SBUK’s board and senior management that controls were working well when they were not;
• failed to report appropriately SBUK’s internal auditors’ concerns and the results of internal testing; and
• failed to impress upon senior management the need for more resources in the MLRO function and failed to take adequate steps to recruit more staff in a timely fashion.
In taking this action, the FCA took into account the fact that Smith did not have sufficient senior management support and was overworked. At the same time, the FCA regards his failings as serious in their own right, because he failed to report his concerns to senior management, relevant board committees, internal auditors or the regulator.
Smith failed to exercise due skill, care and diligence in managing the business of the firm for which he was responsible, found the FCA, and demonstrated a serious lack of competence and capability to has been banned from future compliance roles.
