Smaller banks failing to assess due diligence data
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A number of smaller banks are carrying out little or no due diligence on anti-money laundering, says the FSA.
Last week, an FSA paper on banks’ management of high money-laundering risk situations found several banks, especially smaller ones, have due diligence procedures that resemble “a paper-gathering exercise”, with no obvious assessment of the information collected.
The regulator says there is an over-reliance on the Wolfsberg Group questionnaire, which is designed to develop standards for anti-money laundering and counter-terrorist policies.
According to the FSA, the questionnaire gives answers to anti-money-laundering questions without making use of principles for correspondent banking, where banks provide services to overseas banks to enable them to provide customers with cross-border products and services. It said: “When correspondent relationship reviews were conducted, they were often copied and pasted year after year.”
The FSA visited 27 banks, 19 of which were medium or smaller-sized, including private banks.
It also expressed concern over smaller banks’ attitudes to politically exposed persons (Peps), saying: “Most large banks carried out daily screening to identify new Peps among existing customers. However, at more than a third of smaller banks visited, there was great reliance on the knowledge of relationship managers or other bank staff to identify Peps.”
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