The Financial Conduct Authority has fined EFG Private Bank £4.2m for serious failures in its anti-money laundering controls which spanned over three years.
EFG is the UK private banking subsidiary of Switzerland-based global private banking group EFGI Group. It provides private banking and wealth management services to high net worth individuals including some from overseas jurisdictions recognised as presenting a higher risk of money laundering and bribery and corruption.
At the end of 2011 around 400 of EFG’s 3,342 customer accounts were deemed by the firm to present a higher risk of money laundering or reputational risk, and of these 94 were held by politically exposed persons.
An FSA investigation found that 17 out of 36 reviewed EFG customer files opened between December 2007 and January 2011 showed significant money laundering risks, but insufficient records of how those risks had been mitigated.
Of the 17 files, 13 related to allegations of criminal activity or that the customer had been charged with criminal offences including corruption and money laundering.
In one account, EFG’s due diligence found a prospective client had acquired their wealth through their father, who was alleged to have links with organised crime, money laundering and murder. There was inadequate information on file to explain how the bank concluded this risk was acceptable.
FCA head of enforcement and financial crime Tracey McDermott says: “Banks are the first line of defence to make sure that proceeds of crime do not find their way into the UK.
“In this case while EFG’s policies looked good on paper, in practice it manifestly failed to ensure it was addressing its anti-money laundering risks.
“Poor implementation of its agreed policies risked the bank handling the proceeds of crime. These failures merited a strong penalty from the FCA.”