FCA imposes £37.8m fine on Commerzbank London for AML failures

Maria Nikolova

The fine stems from Commerzbank’s failure to implement adequate AML systems and controls between October 2012 and September 2017.

The UK Financial Conduct Authority (FCA) today announces the imposition of a £37,805,400 fine on Commerzbank AG (London Branch) over the bank’s failure to implement adequate anti-money laundering (AML) systems and controls between October 2012 and September 2017.

Commerzbank London was aware of these weaknesses and failed to take reasonable and effective steps to fix them despite the FCA raising specific concerns about them in 2012, 2015 and 2017.

The FCA’s investigation identified failings in several areas, including Commerzbank London’s failure to:

  • Conduct timely periodic due diligence on its clients, which resulted in a significant number of existing clients not being subject to timely know-your-client checks. By 1 March 2017, 1,772 clients were overdue updated due diligence checks. A material number of these clients were able to continue to transact with the bank’s London branch due to the implementation of an exceptions process, which was not adequately controlled or overseen and which became ‘out of control’ by the end of 2016;
  • Address long-standing weaknesses in its automated tool for monitoring money laundering risk on transactions for clients. For example, in 2015 Commerzbank London identified that 40 high-risk countries were missing, and 1,110 high-risk clients had not been added, to the transaction monitoring tool; and
  • To have adequate policies and procedures in place when undertaking customer due diligence on clients.

This way, Commerzbank breached Principle 3 of the FCA’s Principles for Businesses, which requires firms to have adequate risk management systems in place.

Commerzbank London has undertaken a significant remediation exercise to bring its AML controls into compliance. A Skilled Person has been testing the effectiveness of these enhancements, and their work is now complete.

It has also conducted an extensive look-back exercise to identify suspicious transactions during the period in question. Furthermore, Commerzbank London voluntarily implemented a wide-ranging business restriction, which included temporarily stopping taking on new high-risk customers and suspending all new trade finance business activities.

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