Be pure, be vigilant, behave

Be pure, be vigilant, behave

The UK’s Financial Conduct Authority (FCA) has fined Sonali Bank UK £3.25 million for “serious” anti-money laundering (AML) systems failings.

It has imposed a restriction, preventing it from accepting deposits from new customers for 168 days, and fined the bank’s former money laundering reporting officer (MLRO), Steven Smith, £17,900 and prohibited him from performing the MLRO or compliance oversight functions at regulated firms.

Mark Steward, director of enforcement and market oversight at the FCA, says: “There is an abundance of guidance for firms on how to comply with AML and financial crime requirements and no excuse for failing to follow it.”

Despite having previously received clear warnings about serious weaknesses in its AML controls, Sonali Bank UK “failed to maintain” adequate AML systems between 20 August 2010 and 21 July 2014.

The FCA found serious and systemic weaknesses affected almost all levels of its AML control and governance structure, including its senior management team, its money laundering reporting function, the oversight of its branches and its AML policies and procedures.

This meant that the firm failed to comply with its operational obligations in respect of customer due diligence, the identification and treatment of politically exposed persons, transaction and customer monitoring and making suspicious activity reports.

As a result, Sonali Bank UK breached Principle 3 (taking reasonable steps to organise its affairs responsibly and effectively, with adequate risk management systems) of the FCA’s Principles for Businesses.

While under FCA investigation, Sonali Bank UK breached Principle 11 (dealing with regulators in an open and co-operative way) by failing to notify the FCA of an allegation of significant fraud.

Smith was Sonali Bank UK MLRO and compliance officer from February 2011, and failed on numerous levels “despite repeated warnings” from Sonali Bank UK internal auditors

In taking this action, the FCA took into account the fact that Smith did not have “sufficient senior management support and was overworked”. Both Sonali Bank UK and Smith agreed to settle at an early stage and therefore qualified for a 30% (stage 1) discount.

Work in progress

There is more negative news for the bank.

Four years on since the start of a new core banking system project, Sonali Bank UK is yet to go fully live with Intellect Core Banking.

The operations are “partially automated”, says software supplier Intellect Design Arena, but assures that all parties are committed to the project and will compete it in “near future”.

The bank started its core banking modernisation project in summer 2012. On the way out was (is) Misys’ legacy core banking system, Bankmaster.