The Financial Conduct Authority has fined EFG Private Bank £4.2m for serious failures in its anti-money laundering controls.
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, bribery and corruption.
Between December 2007 and January 2011, 59 per cent of EFG’s customers were from overseas, including some from jurisdictions which did not have anti-money laundering requirements equivalent to the UK or were identified as having a greater level of 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.
An FSA investigation found 17 of 36 reviewed EFG customer files showed significant money laundering risks but there were insufficient records of how those risks had been mitigated.
Of the 17 files, 13 related to criminal allegations or charges.
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: “While EFG’s policies looked good on paper, in practice it manifestly failed to ensure it was addressing its anti-money laundering risks.”
Evolve Financial Planning director Jason Witcombe says: “Firms have a big responsibility to act as a gatekeeper to UK financial services. Sometimes sophisticated ways of laundering money will fly under the radar but sometimes suspicions will be staring you in the face.”