The Financial Services Authority has fined Bank of Scotland £1,250,000 for failing to keep proper records of customer identification as required by the FSA's Money Laundering Rules.
The FSA's investigation confirmed weaknesses in BoS record keeping systems and controls across its retail, corporate and business banking divisions. In over half of the sample of accounts tested in late 2002, BoS had failed to retain either a copy of the customer identification evidence or a record of where this evidence could be obtained. These failings were made worse by the bank's inability to determine the areas in which the breakdown in its record keeping systems had occurred.
FSA director of enforcement Andrew Procter says Bank of Scotland's failure could have seriously undermined its ability to comply with the requirements of orders served by law enforcement agencies under the Proceeds of Crime Act.
He says the failings occurred despite increased regulatory emphasis on the importance of effective anti-money laundering controls since the introduction of the FSA's Money Laundering Rules.
Procter says: “The size of the fine demonstrates that failure by firms to put in place and maintain effective systems and controls will be dealt with severely by the FSA.”