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FSA fines Royal Bank of Scotland Group £5.6m

The Financial Services Authority has today fined members of the Royal Bank of Scotland Group £5.6m for failing to have adequate systems and controls in place to prevent breaches of UK financial sanctions.

UK firms are prohibited from providing financial services to persons on the HM Treasury sanctions list.  The Money Laundering Regulations 2007 require that firms maintain appropriate policies and procedures in order to prevent funds or financial services being made available to those on the sanctions list.

During 2007, RBS Group processed the largest volume of foreign payments of any UK financial institution.

However, between 15 December 2007 and 31 December 2008, RBS, NatWest, Ulster Bank and Coutts and Co, which are all members of RBS Group, failed to adequately screen both their customers, and the payments they made and received, against the sanctions list.

This resulted in an unacceptable risk that RBS Group could have facilitated transactions involving sanctions targets, including terrorist financing.

The FSA considers that RBSG’s failings in relation to its screening procedures were particularly serious because of the risk they posed to the integrity of the UK financial services sector.

This is the biggest fine imposed by the FSA to date in pursuit of its financial crime objective.  It is also the first fine imposed by the FSA under the Regulations.

Margaret Cole, FSA director of enforcement and financial crime, says: “The involvement of UK financial institutions in providing funds, economic resources or financial services to designated persons on the sanctions list undermines the integrity of the UK’s financial services sector.

“By failing to screen relevant customers and payments against the HM Treasury sanctions list, RBS Group left itself open to the risk that it was facilitating terrorist financing.

“The scale of the fine shows how seriously the FSA takes this issue and should act as a warning to other firms to ensure that they have adequate screening procedures.”

As RBSG agreed to settle at an early stage of the FSA investigation, it qualified for a 30% reduction in penalty. The FSA would have otherwise imposed a financial penalty of £8m.

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Comments
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  • Sandra McWhirter 3rd August 2010 at 1:57 pm

    Us-the tax payers and those that were unlucky enough to have shares in the company!

  • David livesey 3rd August 2010 at 12:44 pm

    So, one government dept fines another government dept (as the goverment owns RBS).
    Who actually feels the pain/carries the cost? Who benefits from the £5.6m transfer?
    Discuss.

  • Ancient Wisdom...is a mortgage broker in N3. 3rd August 2010 at 11:25 am

    Does anyone have any stats as to how much Ms M Cole has dished out in fines in the last 3 years?

    I reckon she is the FSA’s no.1 fee generator.

    Glad to see the big banks are also being targeted, as well as the small fries like me.

    Keep up the good work Mag, the FSA clearly need to give you a pay rise.