The FCA has fined Sonali Bank’s UK arm £3,250,600 today and banned its former money laundering reporting officer.

The regulator has also this morning imposed a restriction on Sonali Bank (UK) Limited (SBUK), which is 51% owned by the Bangladeshi Government, preventing it from accepting deposits from new customers for 168 days.

The bank’s former money laundering reporting and compliance officer, Steven Smith, has been fined £17,900 and banned from performing this role or compliance oversight functions at regulated firms. He was in the job from February 2011 and was responsible for overseeing the day-to-day operation of, and ensuring the effectiveness of, the company’s AML systems and controls.

The FCA said it found “serious and systemic weaknesses affected almost all levels of its anti-money laundering 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”.

Officials said 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”.

Mark Steward, Director of Enforcement and Market Oversight at the FCA, said:
“Fighting money laundering is an issue of extreme international importance and ensuring that AML controls are effective and viewed as important throughout the business are fundamental obligations of all regulated firms.

“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.

“The FCA will not hesitate to take action against firms and senior individuals who fall short of our standards. As in this case, such action may include using our powers to restrict a firm’s continuing business.”

Despite having previously received clear warnings about serious weaknesses in its AML controls, SBUK failed to maintain adequate AML systems between 20 August 2010 and 21 July 2014, the FCA said.

An FCA statement read: “In taking this action, the FCA took into account the fact that Mr Smith did not have sufficient senior management support and was overworked. At the same time, the FCA regards his failings as serious in their own right, taking into account that Mr Smith failed to take any of the potential steps open to an MLRO in such a position.

“These include the appropriate escalation of such concerns internally to senior management, relevant board committees or internal auditors, appropriate reporting in annual MLRO reports or reporting concerns to the FCA. Any such report could be made on a confidential basis.

“The FCA found that Mr Smith failed to exercise due skill, care and diligence in managing the business of the firm for which he was responsible, and that he was knowingly concerned in aspects of SBUK’s breach of Principle 3.

“The FCA considers that Mr Smith demonstrated a serious lack of competence and capability and as a result, has prohibited him from performing the money laundering reporting or compliance oversight functions at regulated firms.”

Both SBUK and Mr Smith agreed to settle at an early stage and therefore qualified for a 30% (stage 1) discount.