Fed slaps RBS with cease and desist on US practices

THE FEDERAL Reserve last night ordered the Royal Bank of Scotland to develop a plan for improving oversight of its US operations and complying with anti-money laundering requirements.

RBS has 60 days to submit a written plan showing how it will fall in line with the Bank Secrecy Act and beef up its risk-management practices, the Fed said of its cease and desist order.

The Fed order applies to RBS Group, the holding company, as well as to RBS plc in Edinburgh and its branches in three US states.

RBS must show how it will improve “effective control over and supervision of the US operations’ corporate governance”.

RBS must also prove that it will comply with rules on monitoring potential money laundering activities.

The bank, 83 per cent owned by the taxpayer, said it was already tackling the issue. Chief executive Stephen Hester said: “We set and expect higher standards than those that resulted in this Order. RBS is well advanced in addressing the deficiencies noted by the US banking authorities and in continuing to upgrade our governance and compliance systems throughout the group.”