The FCA said Commerzbank London was aware of these weaknesses and failed to take “reasonable and effective” steps to fix them despite the regulator raising concerns several times between 2012 and 2017.
Weaknesses continued during a time when the FCA was publishing guidance on steps firms could take to reduce financial crime risk, said the watchdog.
FCA executive director of enforcement and market oversight, Mark Steward, said: “Commerzbank London’s failings over several years created a significant risk that financial and other crime might be undetected.
“Firms should recognise that AML controls are vitally important to the integrity of the UK financial system.”
The FCA’s investigation identified failings in a number of areas, including failure to:
- Conduct timely periodic due diligence on its clients. By 1 March 2017, 1,772 clients were overdue updated due diligence checks. A material number were able to continue to transact with the bank’s London branch due to an ‘exceptions process’ which was not adequately controlled or overseen
- Address long-standing weaknesses in its automated tool for monitoring money laundering risk on client transactions. In 2015 Commerzbank London identified that 40 high-risk countries were missing and 1,110 high-risk clients had not been added to the transaction monitoring tool
- Have adequate policies and procedures in place when undertaking customer due diligence on clients.
Commerzbank breached Principle 3 of the FCA’s Principles for Businesses which requires firms to have adequate risk management systems in place.
Since the shortcomings were identified, Commerzbank London has undertaken a “significant remediation” exercise to bring its AML controls into compliance. A Skilled Person has been testing the effectiveness of these enhancements and their work is now complete.
Commerzbank London also voluntarily implemented a wide-ranging business restriction, which included temporarily stopping taking on new high-risk customers and suspending all new trade finance business activities.