The U.K.’s financial regulator fined Al Rayan Bank more than 4 million pounds (U.S. $4.9 million) for its lack of adequate anti-money laundering controls.
Between April 2015 and November 2017, Al Rayan—a subsidiary of Masraf Al Rayan, a Qatar-based Islamic bank—allowed money to pass through the bank without adequately checking customers’ source of wealth or source of funds—two basic requirements to ensure money is not connected to financial crime.
The Financial Conduct Authority (FCA) also found an increased possibility of money laundering and financial crime risk because staff were not properly trained about the risks associated with accepting large deposits.
During the 30-month period the FCA investigated, Al Rayan “accepted £22.74 million in cash deposits of over £10,000 across its branch network,” according to the FCA’s final notice published Wednesday.
Further, more than 300 customers identified as “high risk” or “politically exposed persons” were not subject to periodic know your customer reviews because of a backlog. The bank’s internal audit function failed to review the organization’s financial crime unit for eight years between 2009-17, the FCA alleged.
The regulator said Al Rayan was aware of these weaknesses but failed to implement effective changes to fix them, despite the regulator raising concerns about the inadequacies of the bank’s systems.
The FCA called the failings “egregious.” It has put tackling money laundering as a central tenet of its three-year strategy.
Since the FCA’s intervention in 2017, the bank voluntarily agreed not to take on further high-risk customers, though that restriction has now been lifted following improvements to the bank’s systems and controls.
However, some “limited” restrictions remain until further improvements are made, according to the FCA.
Al Rayan qualified for a 30 percent discount for not disputing the FCA’s findings and for agreeing to settle, lowering its fine from nearly £5.75 million (U.S. $7 million).
Al Rayan response: “The FCA found no evidence of any money laundering or other criminal activity by the bank nor its customers and none of the bank’s existing management were in a senior management function at the time,” said Giles Cunningham, chief executive officer at Al Rayan Bank. “Maintaining strong defenses against the evolving threats of financial crime is an essential part of our business plan and is being led by the new board and executive team.”