Financial services firms are required to maintain robust anti-money laundering (AML) systems and controls, since they are at risk from those seeking to launder the proceeds of crime or to finance terrorism. Between 26 November 2012 and 29 January 2016, Canara failed to maintain adequate AML systems and failed to take sufficient steps to remedy identified weaknesses, despite having been notified of shortcomings in its AML systems and controls.
Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said: “Financial crime and money–laundering failures are areas of focussed priority for us. Canara was warned its money laundering controls were inadequate and so its failure to remediate them properly is at the more serious end of the range of sanctions.”
The Final Notice highlights the importance of branches of overseas banks and their senior management having sufficient understanding of their regulatory responsibilities and ensuring those obligations are met with appropriate resources. Specifically, the FCA found that Canara failed to maintain adequate systems and controls to manage the risk of money laundering. These failures were systemic and affected almost all levels of its business and governance structure including:
(1) Senior Management;
(2) Governance / Oversight;
(3) three Lines of Defence;
(4) Money laundering reporting function; and
(5) AML systems and controls.
As a result, Canara breached Principle 3 (taking reasonable steps to organise its affairs responsibly and effectively, with adequate risk management systems) of the FCA’s Principles for Businesses. Canara agreed to resolve the case and qualified for a 30% discount.
The FCA acknowledges that senior management at Canara have fully co-operated and engaged with the FCA’s investigation and that the firm’s substantive AML deficiencies now have been rectified.