Ireland’s Ulster Bank has been fined €3.3 million for a series of anti-money laundering and terrorist financing failures.
The RBS subsidiary was hit with the largest fine ever imposed by the Irish Central Bank for such breaches after it admitted breaking anti-money laundering and terrorist financing rules over a six-year period. The failures identified by the Central Bank relate to the outsourcing of governance, risk assessment and customer due diligence activities.
The Central Bank has not revealed whether the breaches resulted in any terrorist financing or money laundering taking place.
Derville Rowland, the Irish Central Bank’s Director of Enforcement, commented: “Ulster Bank Ireland’s breaches are especially concerning as they point to unacceptable weaknesses in key aspects of its anti-money laundering framework, systems and controls over an extended period of time.
“As one of the largest retail banks in Ireland, Ulster Bank Ireland provides a gateway to the financial system for more than one million customers through its extensive network of branches, online and telephone banking.
“Therefore, it is imperative that it vigorously applies the highest levels of anti-money laundering compliance in order to protect, not only itself, but its customers and the wider financial system.”
Rowlands said that Ireland’s retail banking system was particularly exposed to potential money laundering and terrorist financing, making it vital that other financial institutions do not allow the weaknesses identified at Ulster Bank to occur.
The news comes weeks after the European Central Bank (ECB) backed plans to bring cryptocurrencies such as Bitcoin under the remit of EU anti-money laundering rules. Responding to a European Commission directive published in July, the ECB said it strongly supported the Commission’s proposal to make virtual currency providers “obliged entities” for anti-money laundering purposes.
Although by its very nature the scale of money laundering around the world is difficult to quantify, a United Nations Office on Drugs and Crime (UNODC) study estimated that $1.6 trillion (€1.44 trillion) was laundered in 2009, the equivalent of 2.7% of global GDP. In a 2011 report, the UNODC suggested that less than 1% of “illicit financial flows” are seized and frozen every year.
In 2012, British-based bank HSBC was fined a record $1.9 billion by US regulators for its failure to implement money laundering controls and enforce sanctions. A Senate investigation said the bank allowed itself to be used by “drug kingpins and rogue nations” as a channel by which to launder dirty money.
The US Justice Department said the bank had helped Colombia’s Norte del Valle organised crime group and Mexico’s Sinaloa cartel lander $881 million through its accounts between them. HSBC’s fine came days after another UK bank, Standard Chartered, was ordered to pay $670 million to US regulators over allegations it had breached sanctions with Iran.