Coutts, the
Queen’s bank, has been fined £8.75million for ‘serious and systematic’ failings
when handling money from suspected criminals or foreign despots.
City
regulators criticised the 320-year-old private bank for taking ‘an unacceptable
risk of handling the proceeds of crime’.
The fine,
imposed by the Financial Services Authority, is a record amount for a money
laundering offence.
Coutts has been fined £8.75million for 'serious and systematic' failings when handling money from suspected criminals or foreign despots |
An original
penalty of £12.5million was cut by 30 per cent as Coutts agreed to settle at an
early stage.
More...
It could be
followed by fines for four other banks referred to the FSA for similar
offences.
Embarrassment: The Queen is a customer of the bank |
Coutts is
owned by the Royal Bank of Scotland, which is 82 per cent taxpayer-owned.
Yesterday
Lord Oakeshott, a leading Lib Dem peer, criticised the actions of Coutts.
He said:
‘Taking dirty money from foreign despots is unacceptable behaviour from any
British bank, but it is beyond belief when it is RBS. How can Stephen Hester
and RBS’s management dream of taking bonuses when they preside over this
systemic and widespread “ask no questions” culture at Coutts?’
Between
2007 and 2010 staff at the bank, which accepts new customers only if they have
at least £1million to invest, failed to check the source of funds when
prospective clients tried to open accounts.
As a result,
money could have come from high-risk countries including Libya, Syria and
Zimbabwe, sources at the FSA revealed.
The FSA
first visited Coutts in October 2010 as part of its review into how banks were
managing situations in which there was a high risk of money laundering.
‘Coutts’
failings were significant, widespread and unacceptable,’ said Tracey McDermott,
the FSA’s acting director of enforcement and financial crime.
‘Its
conduct fell well below the standards we expect and the size of the financial
penalty demonstrates how seriously we view its failures.’ The FSA’s judgment
rubbishes the bank’s exclusive reputation
LibDem peer Lord Oakeshott fiercely criticised the 'ask no questions' culture at Coutts |
In two
cases, its report says: ‘Private bankers did not conduct appropriate checks on
the customers and, as a result, failed to identify serious criminal allegations
against those customers.’
In five
other cases, there were ‘allegations of misappropriation of state funds and
close business and/or personal associations with individuals wanted by law
authorities. In two such cases, there were current international arrest
warrants in force’.
The FSA’s
report is also critical of the fact bankers at Coutts were eager to win new
business and secure a bigger bonus.
The report
states: ‘Performance appraisals and bonus awards would, in part, be determined
by whether they had met their targets.’
Coutts said
it has ‘exited a small number of clients’ since the probe but a spokesman
insisted: ‘We have found no evidence money laundering took place.’
Rory
Tapner, chief executive of the wealth division of RBS, said the bank was
‘disappointed’ it failed to meet the regulator’s standards.
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