FSA Criticizes Banks' Management of High-Risk Money Laundering Situations

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On June 22, the UK Financial Services Authority (FSA) published the results of a thematic review of how banks manage their money laundering risks, particularly with respect to high-risk customers including Politically Exposed Persons (PEPs), correspondent banking relationships and wire transfer payments.

The FSA has serious concerns about the findings of the anti-money laundering (AML) thematic review. It found that some banks appeared unwilling to turn away very profitable business relationships, including with PEPs, even where there appeared to be an unacceptable risk of handling the proceeds of crime. Among other findings, three quarters of the banks the FSA sampled 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 far, two banks have been referred to enforcement following the identification of apparent serious weaknesses in their systems and controls for managing high risk.

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