The FCA in a decision notice today said the GIB failed to establish and maintain appropriate and risk-sensitive policies and procedures; conduct adequate enhanced due diligence when establishing new business relationships and conduct adequate enhanced ongoing monitoring on transactions.

The FCA said the breaches concerned the GIB's anti-money laundering and counter-terrorist financing controls over its correspondent banking activities in the period between January 1, 2012, and December 31, 2016, (the "Relevant Period").

"During the Relevant Period, the monetary value of funds flowing between GIB and its respondent banking customers, net of transfers between customers' own accounts and fixed deposits, totalled £9.5 billion," the decision read.

Discount on original fine

The notice did not contain the detection of actual money laundering at the bank but indicated that "the breaches created a significant risk that financial crime would be facilitated, occasioned or otherwise occur".

The FCA added that the GIB had agreed to resolve the matter and qualified for a 30 per cent discount.

"Were it not for this discount, the Authority would have imposed a financial penalty of £8,328,500 on GIB," the notice said.

"This restriction remains in place. GIB continues to work with the FCA and an independent expert to improve its financial crime controls," the FCA said.

Findings

In a separate statement, the FCA said the GIB provided correspondent banking services to overseas banks. This allowed the GIB to provide products and services they would not otherwise be able to, including making payments in different currencies and across borders.

The FCA requires banks to do extra checks on their correspondent banking customers to reduce the higher risk of money laundering and terrorist financing associated with the service.

"However, between 1 January 2012 and 31 December 2016, GIB did not adequately perform the additional checks required when it established relationships with the overseas banks and failed to demonstrate it had assessed those banks’ anti-money laundering controls," the statement said.

"GIB also failed to undertake annual reviews of the information it held on the banks it had a relationship with, failed to give staff adequate training on how to scrutinise transactions properly and did not establish appropriate policies and procedures for staff".

In December 2016, the FCA visited GIB to review its financial crime controls.

As a result of concerns identified during this visit, GIB voluntarily agreed not to take on new customers.

"This restriction remains in place. GIB continues to work with the FCA and an independent expert to improve its financial crime controls," the statement said.

No evidence of actual laundering by GIB

The statement said no evidence of actual money laundering was detected, though the risk of money laundering as a result of these deficient systems was significant.

"GIB did not dispute the FCA’s findings and agreed to settle at the earliest possible opportunity, which meant it qualified for a 30% discount. Otherwise, the FCA would have imposed a financial penalty of £8,328,500".

Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said: "Firms are gatekeepers of the financial system and have vital obligations to ensure they are not used to facilitate or perpetrate financial crime. These failings meant that GIB was unable to identify and assess the risks posed by its correspondent bank customers and properly scrutinise transactions worth £9.5 billion processed on their behalf during the relevant period. Ensuring firms strengthen their anti-money laundering controls and enforcing failures to comply remain high priorities for the FCA".