British regulator fines RBS bank 5.6 million pounds

3rd August 2010, Comments 0 comments

The British regulator, the Financial Services Authority, said on Tuesday that it had fined the state-controlled Royal Bank of Scotland 5.6 million pounds for lax money laundering controls.

The fine, worth the equivalent of 6.7 million euros or 8.9 million dollars, was for "failing to have adequate systems and controls in place to prevent breaches of UK financial sanctions" in 2007, the FSA said in a statement.

"During 2007, RBS Group processed the largest volume of foreign payments of any UK financial institution," it added.

"However, between 15 December 2007 and 31 December 2008, RBS Plc, NatWest, Ulster Bank and Coutts and Co, which are all members of RBS Group, failed to adequately screen both their customers, and the payments they made and received, against the sanctions list.

"This resulted in an unacceptable risk that RBS Group could have facilitated transactions involving sanctions targets, including terrorist financing."

The Royal Bank of Scotland is now 83-percent state-owned, after the group received a substantial government bailout at the height of the global financial crisis.

The FSA added on Tuesday that the group had agreed to settle at an early stage, prompting a 30-percent reduction in the penalty. Otherwise, RBS would have suffered a larger fine of 8.0 million pounds.

"The involvement of UK financial institutions in providing funds, economic resources or financial services to designated persons on the sanctions list undermines the integrity of the UK's financial services sector," said Margaret Cole, FSA director of enforcement and financial crime.

"By failing to screen relevant customers and payments against the HM Treasury sanctions list, RBSG left itself open to the risk that it was facilitating terrorist financing."

"The scale of the fine shows how seriously the FSA takes this issue and should act as a warning to other firms to ensure that they have adequate screening procedures."

© 2010 AFP

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