The FSA has fined Swiss bank Habib Bank AG Zurich £525,000 and its former money-laundering reporting officer Syed Itrat Hussain £17,500 for failures in setting up adequate anti-money-laundering systems and controls.
The regulator says the failings at Habib, which happened between December 2007 and November 2010, exposed the firm to an “unacceptable risk” of money laundering.
Habib is privately owned with 12 UK branches and around 15,500 customers. The regulator says just under half its customers were based outside the UK and about half of its deposits came from jurisdictions which either had less stringent anti-money-laundering requirements or were perceived to have higher levels of corruption than the UK.
The FSA says Habib failed to set up and maintain adequate controls for assessing the level of money-laundering risk posed by its customers. Habib maintained a high-risk country list but this excluded certain high-risk countries on the basis that it had group offices in them.
The bank also failed to carry out appropriate due diligence on higher-risk customers.
Hussain, who was responsible for the oversight of Habib’s anti-money laundering systems and controls, has retired from the financial services industry.
FSA acting director of enforcement and financial crime Tracey McDermott says: “Habib’s belief that local knowledge of a country through a group office mitigated the higher money-laundering risk posed by that country was entirely misconceived.”