UK fines GTBank for poor money laundering checks

Britain's financial services regulator said on Friday it had fined the UK subsidiary of Nigeria's Guaranty Trust Bank (GUARANT.LG) (GUARq.L) 525,000 pounds ($815,000) for failing to have adequate controls to prevent money laundering.

The Financial Conduct Authority (FCA) said that between May 2008 and July 2010, GT Bank UK had failed to assess potential money-laundering risks, screen customers against sanction lists, establish the purpose of the accounts being opened in their London branch or review the activity of 'high risk' accounts.

'Banks are at the front line in ensuring the proceeds of crime do not enter the UK financial system,' said Tracey McDermott, the FCA's director of enforcement.

'GT Bank's failures were serious and systemic and resulted in an unacceptable risk of handling the proceeds of crime.'

Guaranty Trust Bank opened a UK office in 2008 offering retail and wholesale banking to private and corporate clients, according to the regulator.

Specifically, the FCA said in a statement that it had levied a £525,000 fine on the UK subsidiary of the bank after it looked at the bank's systems as part of a wider review into anti-money laundering controls among banks.

A similar report by the Financial Times quoted the regulator as saying that the bank was not rigorous enough in pressing potential customers on their sources of wealth.

This, it added, included not pressing a client, who was a so-called politically exposed person 'wanted by the UK authorities in connection with laundering millions of dollars of embezzled public funds', on the ultimate source of a cheque for £500,000 that he deposited from an offshore account, according to the regulator's final investigative report.

The regulator, however, declined to identify the individual, the report stated.

The Nigerian authorities in 2007 named GTB's parent bank, the first African bank to list in London, as one of two banks used by the former Governor of Delta State, James Ibori, in their money laundering investigation of him, in which he was acquitted.

Ibori was found guilty of money-laundering and fraud worth £50m last year at Southwark Crown Court and sentenced to 13 years, following a separate investigation and prosecution by the UK authorities.

The UK regulator and its predecessor, the Financial Services Authority, have made anti-money laundering controls a priority over the past two years as tighter directives from Europe and new UK anti-bribery legislation have taken effect.

GT Bank UK's managing director, Mr. Ade Adebiyi,  said in a statement: 'We have fully co-operated with the FCA in its investigation and we have accepted the findings.' The statement said the lapses occurred early in its set up in Britain and had since been addressed.

'The FCA found no evidence that GTB UK did in fact handle any proceeds of crime.'

London has been a favorite money-laundering venue for corrupt Nigerian politicians and criminal gangs. The role of British-based banks was highlighted during the trial and conviction of James Ibori, former governor of Nigeria's oil-producing Delta state, last year.

Ibori and his mistress held accounts at several British banks through which they laundered millions of pounds, it was alleged in the court case.

He is serving a 13-year prison sentence for embezzling 50 million pounds of state funds.