Tuesday, June 28, 2011

Shocking report from the UK's Financial Services Authority

The UK's Financial Services Authority (FSA) has gone public with the shocking accusation that the UK's banks have failed to strengthen processes to limit money laundering, in spite of having had 9 years in which to do so.

The FSA report is titled "Banks’ management of high money-laundering risk situations:
How banks deal with high-risk customers (including politically exposed persons), correspondent banking relationships and wire transfers".

According to the report, UK banks are making profits at the risk of being involved in money laundering. There are serious weaknesses in banks' systems and controls and a willingness to turn a blind eye to profitable business relationships with high-risk customers and regimes. Around three quarters of the bank's reviewed by the FSA - including the majority of major banks - failed to take adequate measures to establish the legitimacy of the source of their customers' wealth and the source of the funds to be used in the business relationship. So "it is likely that some banks are handling the proceeds of corruption or other financial crime".

Well, the FSA may bluster all it wants but it is only when institutions that persistently go the wrong way are disciplined that things are going to improve.

The good news is that two banks have already been referred to enforcement. More may follow. Sphere: Related Content

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