Gatehouse Bank fined £1.5m for weak anti-money laundering checks

This applies to periods between June 2014 and July 2017, where the bank was found to have not carried out sufficient checks on its customers who were based in countries with higher risks of money laundering and terrorist financing. Gatehouse also failed to conduct the correct checks for customers who were classed as politically exposed persons (PEPs). 

In one instance, Gatehouse opened an account for a company based in Kuwait which pooled its customers’ funds for a prospective real estate investment. The bank relied on the company to run checks on its customers rather than carrying them out itself, and failed to confirm the quality of the company’s checks.  

For example, Gatehouse did not require the company to collect information on its customers’ source of wealth and funds. 

This resulted in the bank accepting $62m into an account without properly checking the funds for money laundering risks. 

Concerns raised 

The bank was first made aware of possible issues with its due diligence in 2013 when a consultancy firm appointed by Gatehouse carried out an internal audit. This raised concerns around its ‘know your customer’ reviews, stating that the bank relied on self-certification for high-net-worth individuals. 

Gatehouse also knew that its checks did not meet regulatory requirements when it began to onboard PEPs that year. 

In June 2014, the bank brought these concerns to the FCA and by July, it conducted a compliance review on all its customers, including those from the Kuwait-based firm. 

In January 2016, Gatehouse updated the FCA on its progress relating to ‘know your customer’ issues and in September that year, it produced a report which concluded that its anti-money laundering checks were insufficient. 

Between late 2016 and July 2017, Gatehouse introduced new policies and procedures which were better aligned with regulatory requirements. 

This includes obtaining additional information from customers who present a higher risk of money laundering, and for firms that have relationships with PEPs, measures to establish their sources of wealth and funds. 

The original fine of £2.3m imposed by the FCA was reduced by 30 per cent due to the bank’s agreement to settle at an early stage of the investigation. 

Failures ‘not deliberate’ 

Mark Steward, executive director of enforcement and market oversight at the FCA, said: “Gatehouse Bank’s failures exposed itself to the risk that it might be used as part of a laundering process for illegal funds.  

“While not deliberate, there can be no excuse for failures as serious as this. The FCA will continue to hold firms to account for poor anti-money laundering systems and controls.” 

A spokesperson for the Bank said: “We accept the FCA outcome and can now draw a line under this old issue dating from 2014 to 2017. The team has fully co-operated with the regulator and been engaged throughout the process, a thorough review during this period identified no cases of money laundering. 

“The current executive team joined Gatehouse in 2017 in part to remediate this issue, but also to develop a new retail strategy for the bank supporting homebuyers, landlords and savers. Over the last five years, the bank has invested significantly in financial crime control capabilities to ensure we operate to the highest industry standards. 

“The new strategy has been a great success with financing originations of over £1bn and in excess of £900m of savings deposited with the bank. Our strategic plans to increase support for homebuyers, landlords and savers remain unchanged.”