Last month,  the United Kingdom regulator known as the Financial Conduct Authority (“FCA”) fined Commerzbank London £37.8 million for failures in the bank’s anti-money laundering (AML) procedures. The Final Notice provided by the FCA outlines the problems with the bank’s AML program. Preventing financial crime in banks is of very high importance to regulatory agencies like the FCA and this was not the first time Commerzbank has come under regulator scrutiny. These factors resulted in the large fine.

The FCA found several large problems with the bank’s AML program. In 2016, only 3 full-time employees were a part  of the compliance team, resulting in a large backlog of cases. This team was increased to 42 employees in 2018. One high-risk customer was 5 years overdue for a know-your-customer (KYC) check and engaged in transactions worth hundreds of thousands of euros. The bank also failed to address  problems with an automated tool meant to monitor money laundering risks. All of these problems persisted despite multiple visits by the FCA identifying these issues.

One of the most interesting facets of the Final Notice is the five-step framework to determine the penalty applied to cases like this. The FCA makes several determinations and considers multiple factors, all laid out in the framework. FinCEN and other U.S. regulators do not have a similar framework in place. Although the Department of Justice has released a extensive set of principles detailing how to determine corporate enforcement for violations.

Although the FCA may do things a little differently, all regulators are determined to deter financial crime by ensuring that organizations have a comprehensive, effective AML program in place.

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