Northern Bank fined £1.25m for infringing money laundering rules

The Northern Bank has been fined £1,250,000 by the Financial Services Authority (FSA) today for breaches of its money laundering rules.

The FSA said that the size of the fine "demonstrates the importance" it attaches to its statutory objective of reducing the chance of regulated firms being used for purposes connected to financial crime.

The FSA said that the steps Northern Bank took to satisfy itself that its customers, particularly business customers, really were who they claimed to be, were "inadequate".

Northern Bank had previously identified weaknesses in their customer identification procedures but allowed them to persist, the FSA added.

In a statement the agency said: "The size of the fine in this case reflects the prevalence of the breaches, Northern Bank's share of the market it operates in and its failure to take prompt and effective remedial action after it had originally identified its own failings."

The FSA's investigation revealed "weaknesses" in Northern Bank's anti-money laundering controls across its retail branch network. The investigation found that Northern Bank "failed" to obtain sufficient 'know your customer' information to prove customer identity in an unacceptable number of new business accounts opened across its retail branch network between December 2001 and September 2002. Examples of inadequate verification of identity are where the bank only verified a client's name but not the address, or where the documents the bank obtained were not capable of verifying identity. The failure to adequately identify business clients was a major cause for concern given the fact that corporate entities have been identified by the financial services industry as among the most likely vehicles for money laundering.

As a result of the FSA's action, Northern Bank has put in place a "comprehensive and effective action plan" that has remedied these "serious shortcomings" and the FSA says that is now satisfied that the bank has dealt with the problem.

Carol Sergeant, Managing Director of the FSA, said: "The FSA has made clear that we expect all financial firms to establish and maintain strong and effective anti-money laundering procedures. Firms that fail to do this significantly increase the risk of criminals misusing the financial system to support their criminal activities as well as failing to meet their legal obligations to prevent money laundering.

"The FSA concluded that Northern Bank had contravened Rules 3.1.3 of the FSA's Money Laundering Rules. Rule 3.1.3 provides that: (1) A relevant firm must take reasonable steps to find out who its client is by obtaining sufficient evidence of the identity of any client who comes into contact with the relevant firm to be able to show that the client is who he claims to be."

(GMcG)