A Middle Eastern unit of international banking group Mirabaud was ordered to pay a $3 million fine for inadequate anti-money laundering (AML) controls by the Dubai Financial Services Authority (DFSA).
The DFSA levied the penalty at a discounted rate of 30 percent, not including nearly $1 million in disgorgement the Switzerland-based banking group must pay, the regulator said in a press release Tuesday.
“The level of penalty imposed on Mirabaud reflects the importance of AML compliance in maintaining confidence in the integrity of the [Dubai International Financial Center],” said Ian Johnston, DFSA chief executive, in the release.
The details: Between June 2018 and October 2021, Mirabaud failed to file suspicious activity reports on interconnected client accounts managed by the same relationship manager, according to a DFSA decision notice.
The customer account activities displayed characteristics of money laundering, including complex transactions, deposits from third-party accounts, and funds transferred overseas to entities with opaque ownership structures, the regulator alleged.
Mirabaud failed to consider vital information about the interconnected customers obtained during due diligence, the DFSA said, and the bank allegedly processed a significant volume of questionable transactions during the relevant period.
Moreover, Mirabaud did not identify and report suspicious transactions, even when its compliance department flagged inadequate responses to its inquiries, according to the DFSA.
Compliance considerations: When Mirabaud Middle East’s compliance department flagged certain transactions as suspicious, the relationship manager indicated the client would go to another bank, according to the decision notice. The compliance department responded by calling for a review that never took place.
In other alleged examples, the compliance team failed altogether to even flag suspicious transactions.
During a two-month period in 2019, the compliance team approved two questionable transactions that totaled more than half a million dollars each.
“There is no evidence to suggest that at any point did [Mirabaud Middle East’s] compliance raise any questions in relation to these transactions or attempt to understand or verify the legitimacy of these transactions, such as requesting to see proof of existence or delivery for any of the purchases to which these payments related,” the decision notice stated.
The chief compliance officer at Mirabaud during the time the alleged failings occurred has since left the bank, as has the relationship manager responsible for the customers, the DFSA noted.
Mirabaud did not respond to a request for comment.