FCA fines Standard Chartered Bank £102.2 million (R1.86bn) for poor AML controls

The UK's Financial Conduct Authority (FCA) has fined Standard Chartered Bank (Standard Chartered) £102,163,200 (R1.86 billion) for anti-money laundering (AML) breaches in two higher-risk areas of its business. This is the second largest financial penalty for AML controls failings ever imposed by the FCA.
 
FCA investigations found 'serious and sustained shortcomings' in Standard Chartered's AML controls in its UK Correspondent Banking business between 2010 and 2013, and its branches in the United Arab Emirates UAE) between 2009 and 2014. 

Under the Money Laundering Regulations 2007, Standard Chartered is required to establish and maintain appropriate and risk-sensitive policies and procedures to reduce the risk of the bank being used to launder the proceeds of crime - something which the FCA said it had failed to do. 

The FCA found Standard Chartered had also failed to ensure its UAE branches applied UK equivalent AML and counter-terrorist financing controls.

In one instance the FCA found an account had been opened with AED3m (£500,000) in cash in a suitcase, with little evidence that the origin of the funds had been investigated.  

Standard Chartered had also failed to collect 'sufficient information' on a customer exporting a potentially military affiliated commercial product, which was exported to more than 75 countries including two jurisdictions where armed conflict was, or was likely to be taking place. 

In another case, Standard Chartered did not review due diligence on a customer despite repeated red flags, such as a blocked transaction from another bank. 

Standard Chartered agreed to accept the FCA’s findings, meaning it qualified for a 30% discount, otherwise the FCA would have imposed a penalty of £145,947,500.

The FCA confirmed the US authorities have also taken action against the Standard Chartered group for 'significant violations' of its sanctions laws and regulations.

Mark Steward, director of enforcement and market oversight at the FCA, said: 'Standard Chartered’s oversight of its financial crime controls was narrow, slow and reactive.'

Decision Notice for Standard Chartered