FSA fines RBS £5.6m
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The FSA has today fined members of the Royal Bank of Scotland Group £5.6m for failing to have adequate systems and controls in place to prevent breaches of UK financial sanctions.
UK firms are prohibited from providing financial services to persons on the HM Treasury sanctions list.
The Money Laundering Regulations 2007 require that firms maintain appropriate policies and procedures in order to prevent funds or financial services being made available to those on the sanctions list.
During 2007, RBS Group processed the largest volume of foreign payments of any UK financial institution.
Between December 15, 2007 and December 31, 2008, RBS Plc, NatWest, Ulster Bank and Coutts and Co failed to adequately screen both their customers and the payments they made and received, against the sanctions list.
This resulted in an unacceptable risk that RBSG could have facilitated transactions involving sanctions targets, including terrorist financing.
The FSA says RBSG’s failings in relation to its screening procedures were particularly serious because of the risk they posed to the integrity of the UK financial services sector.
This is the biggest fine imposed by the FSA to date in pursuit of its financial crime objective. It is also the first fine imposed by the FSA under the money laundering regulations.
As RBSG agreed to settle at an early stage of the FSA’s investigation it qualified for a 30 per cent reduction in penalty. The FSA would have otherwise imposed a financial penalty of £8m.
FSA director of enforcement and financial crime Margaret Cole says: “The involvement of UK financial institutions in providing funds, economic resources or financial services to designated persons on the sanctions list undermines the integrity of the UK’s financial services sector. By failing to screen relevant customers and payments against the HM Treasury sanctions list, RBSG left itself open to the risk that it was facilitating terrorist financing.
“The scale of the fine shows how seriously the FSA takes this issue and should act as a warning to other firms to ensure that they have adequate screening procedures.”
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Readers' comments (13)
John Askew | 3 Aug 2010 10:39 am
Ah yes, it's August, holiday time. The FSA are running short of cash and need an injection to pay for the top brass' vacations, so why not issue someone with a hefty fine! That will keep them going at least until next month. In the meantime the staff are pulling straws in Canary Wharf to pick the next large institution to get some money from. A few small regular fines to brokers will cover the tea money but they need at least one large fine every month to prop their lifestyle up.
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Simon Webster | 3 Aug 2010 10:43 am
RBS does not care about this fine they paid it with our money!
According to Wikki this morning RBS is 84% tax payer owned. The control failings of its directors mean the tax payer has just taken another big hit. How the FSA can possibly regard this is as good governance or suitable regulation is beyond me - but then so is most of what it does...
Far more sensible to fine the directors personally. It would make them both more accountable and more careful.
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Anonymous | 3 Aug 2010 10:44 am
Nice to see the UK taxpayer paying for FSA salary and bonuses again. Makes a change that evey one pays something not just IFA's
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Anonymous | 3 Aug 2010 10:48 am
At last. This is music to my ears. They need to be treated the same as other financial institutions.
I had my compliance guy in my house for 4 hours checking every single thing you can imagine. He was delighted when I had the sanctions list on my favourites. He actually found that that everything was spot on and couldn't find anything wrong at all. Phew! I suppose I am a bit of a perfectionist.
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Martin Green | 3 Aug 2010 10:51 am
Ah lovely, so now the tax payers can pay the FSA's wage too.
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Matt Collins | 3 Aug 2010 10:51 am
The comment above from John , whilst written with a twist of humour and a dash of sarcasm is nothing short of out-placed in the context of the fine.
How was the twin towers terrorist effort financed....?..... its all laundered money, or legitimate cash destined for evil intent.
Having a sanctions list makes perfect sense, if these large institutions cant put a procedure in place to ensure they are not facilitating mass murder or seriously organised crime then let the regulator make a financial example of them!
Sorry John, i appreciate the distain for the FSA, and would agree its often warrented, but here...something had to be done, and hitting the large firms in the pocket, makes them sit up and think!
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Ken | 3 Aug 2010 11:02 am
Should the headline not read "FSA fines taxpayers £5.6m"..........
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Mike Fenwick | 3 Aug 2010 11:50 am
Quote: "By failing to screen relevant customers and payments against the HM Treasury sanctions list, RBSG left itself open to the risk that it was facilitating terrorist financing."
Given Margaret Cole's reference to terrorism, and given the discretion that was used in discounting the fine - I wish the FSA had gone one simple step further and asked RBS to pay the £5.6m to "Help for Heroes".
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Anonymous | 3 Aug 2010 12:03 pm
The FSA should have fined the Directors personally not the us tax payers!
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Reggie Later | 3 Aug 2010 12:16 pm
Like a flea on an elephant's backside, this is an insignificant sum of money and I agree with others that the directors and officers should be pointed at, fined and banned because this is no deterrent, it is just a sound bite, a case of "aren't we ever so clever reggielaters", "gissa job in the new improved reggielater".
Pewk!
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