The bankers ignore everybody, they are a law unto their own 🙁

This article titled “British banks ignore money-laundering rules, says FSA” was written by Simon Bowers, for The Guardian on Wednesday 22nd June 2011 20.16 Europe/London

The City of London is showing brazen disregard for rules to stop money laundering and is welcoming with open arms some of the world’s most unsavoury political leaders and their cronies, according to a damning report by the Financial Services Authority.

The detailed study showed a third of banks were willing to dismiss serious allegations of corruption made repeatedly by credible sources, while others claimed to have run extensive money-laundering checks even though they had failed to spot grave allegations of criminality instantly found by a simple Google search.

More than a quarter of banks were only too delighted to offer services to controversial foreign politicians on the basis that credible allegations of corruption had not yet resulted in a criminal conviction.

The FSA’s scathing report, produced after 35 research visits by the regulator to 27 banks, was published on Wednesdayhot on the heels of a series of asset-freezing orders belatedly imposed by authorities around the world in the wake of the Arab spring uprisings in north Africa and the Middle East. Among those targeted are former presidents Zine al-Abidine Ben Ali of Tunisia and Egypt’s Hosni Mubarak.

The FSA report suggests Britain’s banks, large and small, have done little to mend their ways since findings 10 years ago that 15 City firms played a central role in laundering up to .3bn of funds linked to former Nigerian dictator Sani Abacha. Those firms received nothing more than a private censure. Leaks later revealed that among those to have done at least some business with the Abacha regime were Barclays, HSBC, NatWest, and the London branches of Deutsche Bank and Commerzbank.

The latest findings of pervasive willingness to ignore or circumvent money-laundering controls in pursuit of lucrative clients comes despite supposed tough new laws and enforcement powers which came into force three years ago.

Robert Palmer of campaigners Global Witness said the FSA’s warts-and-all report was commendably candid — far more so than comparable reports elsewhere in the world — but also raised questions as to the regulator’s effectiveness. “If I was the FSA I would be embarrassed that the banks they are supposed to regulate have such a disregard for regulations that have the force of law.”

Defending the FSA’s position, Tracey McDermott, acting head of financial crime, said: “It is not a pretty picture. Obviously, we would have preferred it if there was better compliance … The banks are just not taking the rules seriously enough.” She insisted the regulator did now have the teeth to deal with those failing to apply the rules, pointing to two continuing disciplinary investigations into the activities of two banks. More inquiries into money laundering are expected to follow. Last summer the FSA fined RBS £5.6m for failing to ensure customers were not involved in terrorism. But critics note such fines pale into insignificance next to financial penalties the FSA’s regulatory counterparts are able to impose in the US. “£5m is nothing,” said a spokeswoman for Global Witness. “It’s hardly one banker’s bonus.”

Case Studies

• A former state governor from a high-risk country was referred to a small UK bank by its own chairman, who had deposited funds in his account. There was no explanation why the bank’s chairman was crediting the account.

• The wife of a suspected fraudster wanted by Interpol was able to open an account in 2009 claiming funds transferred from an offshore tax haven were a bonus paid to her husband. The bank acknowledged this “poses a high reputational risk” but nevertheless initially classified the transaction as being low-risk for money laundering.

• A student who was a close relative of a controversial politician was able to open an account with a £1m deposit from his relative in 2008. If the bank had checked the source of the money it would quickly have discovered the politician was the subject of a worldwide freezing order and charges of misappropriation of state funds.

• A UK company controlled by the wife of a former politician from a country known for corruption was able to open an account with a major UK bank despite widespread and repeated allegations of her husband making large profits from abusing political power. The decision to close the account was taken just before the FSA’s visit.

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