Andrew Procter, FSA Director of Enforcement, said:
"All UK-based regulated firms must have adequate anti-money laundering procedures in place for client identification and verification to avoid breaching the Money Laundering Rules."RZB London's failure to comply with the client identification provisions exposed the firm to an unacceptable risk of being used for money laundering. I note, however, effective remedial action has been taken to resolve the problem."
The FSA's investigation found that RZB London failed to act promptly to update its anti-money laundering (AML) and compliance manual, last updated in 1999, to reflect the introduction of the FSA's Money Laundering Rules in 2001. RZB London's compliance manual did not include sufficient assistance to staff to enable them to comply with identification requirements for certain categories of customers. This exposed RZB London to an unacceptable risk that it would be used to launder money.
After the failings were identified RZB London devoted considerable resources to implementing a comprehensive remedial action plan which has resulted in appropriate controls being introduced.
These failings occurred despite increased regulatory emphasis on the importance of effective anti-money laundering controls before and since the introduction of the FSA's Money Laundering Rules.
Background
- The Final Notice for this case is available here.
- The FSA concluded that RZB had contravened Rule 3.1.3 and 2.1.1 of the FSA's Money Laundering Rules. Rule 3.1.3 provides that:
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.
Rule 2.1.1 provides that:
A relevant firm must set up and operate arrangements, including the appointment of a money laundering reporting officer (MLRO) in accordance with the duty in ML7, which are designed to ensure that it, and any appointed representatives that act on its behalf, are able to comply, with the rules in this source book.
- Documents that can be used to verify a customer's identity - that is, his or her name and address - are set out in the Joint Money Laundering Steering Group Guidance Notes and include a valid passport, a driving licence and a recent utility bill. For businesses, evidence of the identities of the principal beneficial owners/controllers should generally be obtained as should evidence of the trading address of the business.
- Enforcing breaches of the Money Laundering Rules is only one aspect of the FSA's work in reducing the extent to which regulated firms can be used for the purpose of money laundering and terrorist financing. The FSA also works with the financial services industry to develop anti-money laundering initiatives, share best industry practice and provide training. Recent FSA projects include:
- Publishing the results of an FSA review of current practices across a number of banks and building societies in the retail banking sector (further details here).
- Publishing Discussion Paper 22 in August 2003 on KYC and anti-money laundering monitoring.
- Issuing with the Treasury & NCIS joint public information materials on the reasons for identification.
- Raiffeisen Zentralbank Österreich's registered office is Austria House, 36-38 Botolph Lane, London EC3R 8DE.
- Further information about the FSA's anti-money laundering work can be found here.
- The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection of consumers; and fighting financial crime.
- The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.
