Between 1 April 2015 and 30 November 2017, the bank did not have adequate anti-money laundering (AML) controls in place, the Financial Conduct Authority (FCA) said.
Al Rayan failed to adequately check customers wealth and funds, and the issues were made worse by lack of proper training for staff about how to handle large deposits.
This heightened the risk of money laundering and financial crime, the watchdog said.
Despite being aware of these weaknesses Al Rayan failed to implement effective changes to fix them, even though the FCA raising concerns about system inadequacies.
The bank was visited by the watchdog in 2017 and agreed not to take on further high-risk customers, this restriction has now been lifted following improvements to systems and controls.
However, Al Rayan remains subject to some limited restrictions while further improvements are made, the FCA said.
FCA: ‘Risk caught in time…failings egregious’
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “Al Rayan failed to manage the risk that it might be used to facilitate money-laundering.
“These failings create the conditions in which financial crime is facilitated and can take root within a firm. While the risk was caught in time, the failings here were egregious.
“The FCA will continue to raise the stakes for firms that do not take their financial crime responsibilities seriously, especially in preventing money laundering risks which harms confidence and integrity in our market and in preventing financial crime, which is a key component in the FCA’s three-year strategy.”
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