June 17, 2020 / 10:05 AM / 17 days ago

UK fines Commerzbank $47 million for lax money laundering controls

LONDON (Reuters) - Britain has fined the London branch of Germany’s Commerzbank 37.8 million pounds ($47.3 million) for failing to have proper controls to prevent money laundering, the UK’s financial watchdog said on Wednesday.

FILE PHOTO: A company logo is pictured at the headquarters of Germany's Commerzbank AG during the annual results news conference in Frankfurt, Germany, February 13, 2020. REUTERS/Ralph Orlowski/File Photo

Banks have to check the background of clients and by March 1, 2017, Commerzbank’s checks were overdue on 1,772 customers, the Financial Conduct Authority said.

Many of the customers were allowed to continue to conduct business with the London branch of the bank under an “exceptions process” that became “out of control” by the end of 2016, the FCA added.

“Commerzbank London was aware of these weaknesses and failed to take reasonable and effective steps to fix them despite the FCA raising specific concerns about them in 2012, 2015 and 2017,” the FCA said in a statement.

At the time, the FCA was publishing guidance on steps banks could take to reduce the risk of financial crime, and was enforcing action against several firms in relation to anti-money laundering controls, the watchdog said.

“Despite these clear warnings, the failures continued.”

Commerzbank said it takes the FCA’s findings very seriously, and has cooperated fully in an investigation that found no actual financial crime.

“Commerzbank London has therefore undertaken a significant remediation exercise,” the Frankfurt-based bank said in a statement.

The FCA said external people have tested the effectiveness of these enhancements and their work is now complete.

In mid-2016 Commerzbank’s financial crime team in London had just three full-time staff, but this was increased to 42 within two years.

Commerzbank would have been fined 54 million pounds if it had not agreed to an early settlement.

Reporting by Huw Jones, additional reporting by Patricia Uhlig in Frankfurt, editing by Louise Heavens, Elaine Hardcastle

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