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Commerzbank has been ordered to pay more than £37M for its lack of money laundering controls

Author: Syedur Rahman  30 June 2020

Syed Rahman believes the fine serves as a warning to financial institutions about the need to take compliance seriously.

Commerzbank has been fined £37,805,400 by the Financial Conduct Authority for anti-money laundering failings.

The bank’s London branch was penalised for having inadequate anti-money laundering (AML) systems and controls in place between October 2012 and September 2017.

In announcing the fine, the FCA said Commerzbank London was aware of the weaknesses and failed to take reasonable and effective steps to fix them, even though the Authority raised specific concerns about them in 2012, 2015 and 2017. These weaknesses continued as the FCA was publishing guidance on what firms should to reduce financial crime risk.

FCA Executive Director of Enforcement and Market Oversight, Mark Steward, said:

“Commerzbank London’s failings over several years created a significant risk that financial and other crime might be undetected. Firms should recognise that AML controls are vitally important to the integrity of the UK financial system.’’

The bank’s failings included not conducting timely, periodic due diligence on its clients and not addressing long-standing weaknesses in its automated tool for monitoring money laundering risk. It has since undertaken efforts to ensure its AML controls are legally compliant and has reviewed its activities for identifying suspicious transactions.

Commerzbank London agreed to resolve the matter at an early stage of the investigation, which meant it qualified for a 30% discount on its fine. Without this, the financial penalty would have been £54,007,800.

The fine acts as both a warning that compliance needs to be taken seriously and a sign that the FCA will not hesitate to take action.  As the years have gone on, FCA investigations have become more detailed and have led to larger penalties being imposed. In 2017 the FCA fined Deutsche Bank £163M for serious AML control failings and two years later imposed a £102M fine on Standard Chartered Bank for a lack of AML controls.

Financial institutions need to understand that the FCA is looking to take a vigorous approach to enforcement.

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Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, international arbitration, civil recovery, cryptocurrency and high-stakes commercial disputes.

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