FCA fines Standard Chartered £102m for anti-money laundering breaches

The FCA found that a customer was able to open an account with 3 million UAE Dirham (just over £500,000) in cash in a suitcase.

Rozi Jones
9th April 2019
Standard Chartered
"Standard Chartered’s oversight of its financial crime controls was narrow, slow and reactive."

The FCA has fined Standard Chartered Bank £102.2m for anti-money laundering breaches - the second largest financial penalty of its kind ever imposed by the FCA.

Today’s announcement follows FCA investigations into 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.

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

It found that Standard Chartered 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.

The FCA also found "significant shortcomings" in Standard Chartered’s own internal assessments of the adequacy of its controls and its approach towards identifying and mitigating material money laundering risks.

During the investigation, the FCA found that one customer was able to open an account with 3 million 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 commercial product which could, potentially, have a military application. This product was exported to over 75 countries, including two jurisdictions where armed conflict was taking place or was likely to be taking place.

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

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% discount.

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 is working to improve its AML controls to ensure all issues are fully addressed on a global basis. The FCA has taken into account Standard Chartered’s remediation work and its cooperation in assisting the FCA investigation, without which today’s financial penalty would have been even higher.

“The FCA has worked closely and extensively with a number of UK and overseas agencies including the US Department of Justice, New York County District Attorney, US Board of Governors of the Federal Reserve, New York State Department of Financial Services and US Office of Foreign Assets Control. I would also like to acknowledge the assistance of the UAE Central Bank whose commitment has demonstrated the fight against money laundering is a truly global one, as it needs to be.”

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