Commerzbank fined £38m for money-laundering failings
The UK's Financial Conduct Authority imposes fine after the bank failed to take steps to improve controls despite warnings in UK and US
Frankfurt — Commerzbank was fined £38m in the UK for a lack of money-laundering controls at its London unit, as regulators step up pressure on banks to combat the flow of illicit funds.
Germany’s second-largest listed lender did not conduct timely due diligence on a “significant number” of customers and failed to fix weaknesses in an automated tool used to monitor transactions for money-laundering risks, the Financial Conduct Authority (FCA) said in announcing the fine. Commerzbank failed to take steps to improve controls despite a series of warnings from the UK watchdog and multiple investigations in the US.
“Commerzbank London’s failings over several years created a significant risk that financial and other crime might be undetected,” FCA director of enforcement Mark Steward said in a statement. “Firms should recognise that AML controls are vitally important to the integrity of the UK financial system.”
The fine, which covers shortcomings between 2012 and 2017, is the latest example of a large European bank struggling to put in place measures to stop illicit funds. Commerzbank paid $1.45bn to settle US probes in 2015 while rival Deutsche Bank also has been hobbled by similar problems. A vast Baltic money-laundering scandal has drawn in many of Scandinavia’s biggest lenders.
The FCA did not find any examples of financial crimes taking place because of the lack of controls, according to the statement. Still, it cited several examples of shortcoming, including an automated system the lender used to flag potential money-laundering. The bank found that the system was missing about 40 high-risk countries and 1,100 high-risk clients since 2015, according to the statement.
Commerzbank has since embarked on a “significant remediation exercise” to bolster controls in London, the FCA said. The London branch also temporarily halted taking on new high-risk customers and suspended all new trade finance business activities.
“The bank has taken the findings of the regulator very seriously,” Claire Tappenden, a spokesperson for the bank, said in a statement. “Commerzbank is committed to ensuring that our business fully complies with the regulatory requirements. This has the highest priority at the bank.”