FSA fines Swiss banks UK branches £525k over money laundering failings – Regulator fines Habib Bank AG Zurich and its former money laundering reporting officer over reporting failures.

The Financial Services Authority has fined the following for failings in relation to its anti-money laundering systems and controls.

1. Habib Bank AG Zurich £525,000 and
2. its former money laundering reporting officer Syed Itrat Hussain £17,500

The failings at Habib lasted almost three years and exposed the firm to an unacceptable risk of laundering money, the FSa said in a statement.

Habib is a privately owned Swiss bank with twelve branches in the UK and approximately 15,500 customers.

Approximately 45% of its customers were based outside the UK and about half of its deposits came from jurisdictions which had less stringent AML requirements than the UK, according to the regulator.

The FSA’s investigation identified that during the period 15 December 2007 to 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 countries on the basis that it had group offices in them.

However, the FSA said that Habib’s local knowledge of these countries did not negate the higher risk of money laundering they presented. The FSA 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); and

• the enhanced due diligence had not been conducted prior to transactions occurring on the account.

As MLRO, Mr Hussain was responsible for oversight of Habib’s AML systems and controls, but failed to ensure that these systems and controls were adequate. He has now retired from the financial services industry, the FSA confirmed.

Tracey McDermott, acting director of enforcement and financial crime, 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.”

Both Habib and Mr Hussain agreed to settle at an early stage and therefore qualified for a 30 per cent discount. Were it not for this discount, the FSA would have imposed a financial penalty of £750,000 on Habib and £25,000 on Hussain.

http://www.ftadviser.com/2012/05/15/regulation/regulators/fsa-fines-swiss-bank-k-over-money-laundering-failings-Agy9clIE5ICKjDSvRB6gPI/article.html