Canara Bank in India has been fined $1.2 million by the UK Financial Conduct Authority (FCA) for multiple anti-money laundering (AML) failures and has been barred from accepting new deposits for up to five months.
The FCA notified Canara Bank of its weak AML regulations during visits in November 2012 and March 2013, but despite these warnings the bank failed to implement better AML measures. In addition, the bank hired employees from India to fill UK senior management positions, which added to their compliance failures because the FCA believes that “As a result of this practice, some of the individuals in question have lacked the necessary understanding of applicable UK legal and regulatory AML requirements.”
After a third visit in April 2015, the FCA appointed a “Skilled Person” or independent expert to evaluate Canara’s regulations and practices in September 2015 after finding the bank had failed to implement “a culture of compliance” for proper AML regulations. In January 2016, the Skilled Person’s report found AML risk management failures and that Canara Bank’s systems were unable to identify politically exposed people (PEPs) and detect and flag suspicious transactions. The FCA stated, “These failings are endemic throughout Canara’s UK operations, affecting almost all aspects of its business and suggested that Canara may not be fit and proper.” The report also added that Canara’s weak regulations could put the bank at a higher risk for money laundering, terrorist financing, and individuals looking to evade taxes or sanctions.
According to Krishna Kant, head of compliance in London, Canara Bank has since solved all of its AML problems. In addition, because Canara was willing to settle and offered full cooperation during the investigation, the fine was dropped by 30%.
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