FSA fines RBS for deficient money laundering controls

THE ROYAL Bank of Scotland has been slapped with a record £5.6m fine by the Financial Services Authority (FSA) for failing to adequately screen customers and payments to prevent its banks – RBS, NatWest, Ulster Bank and Coutts – from being used for money laundering or the financing of terrorist activities.

In December 2007 to 2008, RBS did not check if customers were on government sanctions lists, which the FSA said had led to an “unacceptable risk” of it facilitating terrorist financing.

RBS received a 30 per cent discount on the fine for cooperating with the FSA’s investigation.

In 2007, RBS processed the largest volume of foreign payments of any UK financial institution, which the FSA said left it vulnerable to “facilitating transactions involving sanctions targets, including terrorist financing”.

Margaret Cole, the FSA’s head of enforcement, said: “The involvement of UK financial institutions in providing funds or financial services to designated persons on the sanctions list undermines the integrity of the UK’s financial services sector.”

RBS said it had acknowledged its failings and was improving its systems.