The FSA described the failures, which lasted for three years, as ‘significant, widespread and unacceptable’.

Coutts breached Principle Three of FSA Handbook which states that firms must take reasonable care to organise and control its affairs responsibly and effectively with adequate risk management systems.

The errors were first identified on an FSA visit in 2010 which found Coutts did not apply robust controls when starting relationships with high-risk customers and did not monitor these relationships.

It also failed to gather sufficient information on the sources of wealth and funds for high-risk customers, identify adverse intelligence about prospective and existing high-risk customers, keep information up to date and scrutinise transactions made for high-risk customers.

Tracey McDermott, acting director of enforcement at the FSA, said: “Coutts failings were significant, widespread and unacceptable. Its conduct fell well below the standards we expect.

“Coutts was expanding its customer base which increased the number of high risk customer relationships. The regulatory environment in relation to financial crime had also changed. It is therefore particularly disappointing that Coutts failed to take appropriate steps to manage its AML (Anti Money Laundering) risks.”

Coutts agreed to settle at an early date, reducing the fine from £12.5m to £8.75m.