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Bank fined £1.5m for poor AML framework, systems and controls

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London-based challenger bank Gatehouse has been handed a £1.5m fine from the Financial Conduct Authority (FCA) over a failure to conduct proper anti-money laundering checks.

Authorised by the FCA in April 2008, Gatehouse is a challenger bank that is Shariah-compliant, which primarily focused on real estate. Being Shariah-compliant, it follows economic and banking rules that adhere to Islamic principles, such as not paying interest.

The FCA has deemed that between June 2014 and July 2017, Gatehouse failed to conduct sufficient checks on its customers based in countries with a higher risk of money laundering and terrorist financing. The bank also failed to undertake the correct checks on customers classed as Politically Exposed Persons (PEPs), meaning politically significant figures who must be checked carefully for bribery and money laundering.

The regulator also recounted an instance where the bank set up an account for a company based in Kuwait, without requiring the company to collect information about the source of customers’ funds or wealth. Over a two-year period, Gatehouse accepted $62m (£55m) into the account without properly vetting the funds for financial crime risks.

Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, commented:

‘Gatehouse Bank’s failures exposed itself to the risk that it might be used as part of a laundering process for illegal funds. While not deliberate, there can be no excuse for failures as serious as this. The FCA will continue to hold firms to account for poor anti-money laundering systems and controls.’

The total fine amount handed to the bank is a 30% reduction on the initial penalty of £2.2m. The firm qualified for this reduction as it agreed to settle the case at an early stage of the investigation. Gatehouse has subsequently taken significant steps to improve its financial crime systems and controls.

How Neopay can help

This latest fine highlight the importance of why financial service firms need to ensure they are meeting their compliance obligations and have strong systems and controls in place. At Neopay we provide various audits to help you identify any gaps in your compliance framework. Our range of tailored solutions support your compliance and Money Laundering Reporting Officer (MLRO) in enhancing your customer risk assessment, to ensure geographical risks are considered in accordance with the regulatory requirements. As well as embedding robust due diligence processes for different customer types, such as PEPs with the required level of additional requirements and controls.

For more information on how we can support your business, contact us here.

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