A Douglas-based bank has been fined for a failure to abide by rules designed to stop money laundering.
Standard Bank was investigated by the Financial Services Authority after the bank discovered that, in September 2020, it had acted in breach of a restraint order issued by the Manx courts connected with the Proceeds of Crime Act.
That order was meant to effectively freeze a Standard Bank customer’s accounts, the details of which were not disclosed.
Standard Bank reported itself to the FSA. It was fined £353,320, which was discounted by 30% to £247,324.
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Standard’s breach enabled the transfer of funds between the ’restrained’ accounts within Standard and processing an instruction from the client for further transfer of funds out of the Isle of Man to another Standard Bank group entity.
The bank’s failure stemmed from inadequate safeguards for transferring money through its own subsidiaries.
It was only discovered in April 2021 when the client requested a third party transaction.
The FSA ruling says: ’Standard acknowledges that the failings arose because of a weakness in its operational controls and systems of "locks" applied to customer accounts that are intended to ensure that monies cannot be moved from such accounts in particular circumstances.
’Standard also acknowledges that it did not have sufficient detective controls in place to identify the issue in a timely way.’
It says that the bank ’did not act with due skill, care and diligence in carrying on regulated activity’.
It adds: ’Standard carried on business in a way likely to bring the island into disrepute or damage its standing as a financial centre.’
The breaches contravened the Anti-Money Laundering and Countering the Financing of Terrorism Code.
The FSA says it is satisfied that Standard cooperated fully and engaged positively.
The agreement between the FSA and Standard was concluded on Thursday last week.
’Standard has confirmed to the authority that operational controls have been enhanced to prevent any similar breach occurring,’ the FSA says.