The Financial Services Authority (FSA) has today fined the Bank of Ireland (BoI) 375,000 for failing to have in place systems to detect a series of high-risk, cash transactions worth approximately 2 million, which were undertaken in breach of their policies and procedures. These transactions appear to be suspicious and are currently being investigated by law enforcement.
Philip Robinson, financial crime sector leader at the FSA, said:
“Adequate systems and controls are fundamental to the UK anti-money laundering regime’s effectiveness and firms must identify the money laundering risks in their business and take appropriate action to reduce these.
“These transactions were high-risk in terms of providing scope for money laundering and were in breach of BoI’s policies and procedures. Furthermore, they continued for a period of four years. BoI did not establish adequate systems and controls to monitor the issuing of bank drafts and did not check that its staff understood fully their anti-money laundering responsibilities in relation to the recognition and reporting of suspicious transactions.”
The FSA found that between 1998 and 2002, 40 bank drafts were issued for cash for one of the branch’s largest customers. The drafts were made payable to the BoI and, because the identity of the owner of the cash was disguised, were an effective means of money laundering. Bank staff that were aware of the circumstances of the transactions did not identify them as suspicious.
The cash used to purchase the bank drafts was deposited in an internal branch account without first passing through the customer’s account. This practice, in breach of BoI’s policies and procedures, allowed the customer to use the drafts outstanding account as a deposit account, which could have prevented Law Enforcement Agencies from establishing the true owner and source of the funds.