Standard Chartered fined £102m after customer opened account with £500k in suitcase

Standard Chartered fined £102m after customer opened account with £500k in suitcase

 

The FCA investigated two areas of Standard Chartered’s business identified by the bank as higher risk – its UK Wholesale Bank Correspondent Banking business and its branches in the United Arab Emirates (UAE).

In the latter, a customer was allowed to open an account with 3m UAE Dirham in cash in a suitcase, just over £500,000, with little evidence that the origin of the funds had been investigated.

The bank also failed to collect sufficient information on a customer exporting a product with a potential military application to more than 75 countries – including two where armed conflict was taking place.

 

‘Serious and sustained shortcomings’

The FCA found “serious and sustained shortcomings” in Standard Chartered’s AML controls relating to customer due diligence and ongoing monitoring.

It said the bank failed to establish and maintain risk-sensitive policies and procedures, and failed to ensure its UAE branches applied UK equivalent AML and counter-terrorist financing controls.

There were also significant shortcomings in Standard Chartered’s own internal assessments of the adequacy of its AML controls, which exposed them to the risk of breaching sanctions and increasing the risk of receiving and/or laundering the proceeds of crime.

Standard Chartered’s failings occurred in its UK Correspondent Banking business between November 2010 and July 2013 and in its UAE branches from November 2009 to December 2014.

US authorities have also taken action against the Standard Chartered group for significant violations of US sanctions laws and regulations.

 

‘Especially serious breaches’

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.”

Standard Chartered did not dispute the FCA’s findings and exercised its right, under the FCA’s partly contested case process, to ask the FCA’s Regulatory Decisions Committee to assess the appropriate level of sanction.

Standard Chartered’s agreement to accept the FCA’s findings meant it qualified for a 30 per cent discount, reducing the total to £102,163,200. Otherwise, the FCA would have imposed a financial penalty of £145,947,500.