The FCA has fined Gatehouse Bank, a Shariah-compliant challenger bank, £1.5m for poor anti-money laundering checks.
The regulator reported today that it had fined Gatehouse Bank Plc £1,584,100 for “significant weakness” in its financial crime systems and controls.
The bank failed to carry out sufficient money laundering checks on transactions from countries with a higher risk of money laundering and terrorist financing.
In one case it failed to carry out adequate checks on a £55m transfer from Kuwait.
The bank was founded in London in 2008 to provide financial products in line with Shariah principles.
Its range includes savings products and finance for property transactions.
The bank has partly focused on developing for the private rented sector and has aimed to attract foreign investors to fund this.
The FCA said, however, that between June 2014 and July 2017 Gatehouse failed to conduct “sufficient checks” on its customers based in countries with a “higher risk of money laundering and terrorist financing.”
Gatehouse also failed to undertake the correct checks when some of its customers were classed as Politically Exposed Persons (PEPs), people defined as at more risk of bribery or corruption.
The regulator said in one instance, Gatehouse Bank set up an account for a company based in Kuwait to aggregate customer funds however it did not require the company to collect information about customers’ source of funds or wealth. This information was required under Gatehouse’s anti-money laundering policies.
As a result of the oversights, over a two-year period, Gatehouse accepted US$62,000,000 (£55m) into the account without properly vetting the funds for financial crime risks.
Gatehouse has subsequently taken “significant steps” to improve its financial crime systems and controls, the FCA said.
Mark Steward, FCA executive director of enforcement and market oversight, said: “Gatehouse Bank’s failures exposed itself to the risk that it might be used as part of a laundering process for illegal funds.
“While not deliberate, there can be no excuse for failures as serious as this. The FCA will continue to hold firms to account for poor anti-money laundering systems and controls.”
The fine of £1,584,100 followed Gatehouse Bank’s agreement to settle at an early stage of the investigation. As a result, it qualified for a 30% reduction on the original penalty of £2,263,084.
