FCA has fined Gatehouse Bank £1.5m (after a 30% reduction for early settlement) for significant weaknesses in its AML controls which lasted for 3 years to July 2017. It found the bank generally failed to conduct appropriate CDD on customers based in high risk countries, and specifically did not undertake proper checks when customers were PEPs.
The Bank is a Shariah-compliant bank which was at the relevant time offering services primarily focusing on real estate. Most of its customers were from high risks countries.
FCA noted the firm had on one occasion set up an account for a company in Kuwait to use to aggregate customer funds, but did not require the collection of customers’ source of wealth or funds, which breached its own AML policy. The account accepted $62m over 2 years, without the funds being properly vetted for financial crime risks.
FCA found that the firm:
- did not have in place proper CDD procedures to verify the identity of its customers and those with a beneficial interest in the customer, to establish and scrutinise source of wealth and funds;
- did not carry out EDD on higher risk customers and PEPs;
- did not carry out appropriate ongoing monitoring or check CDD was up to date; and
- did not have the internal controls to identify and rectify the problems.
FCA found the compliance function was under-resourced and that although the bank had adopted a 3LOD model, it did not operate this effectively.
The bank has now invested in improving its systems and controls and has updated its policies and procedures.