FSA fines Abbey records £2.3m

Abbey National was yesterday fined a record £2.3m by the financial regulator for "extremely serious failings" in its anti-mongy laundering procedures.
The Financial Services Authority said the penalty reflected lapses in controls and systems at the UK's sixth largest bank "over a prolonged period".
This is the highest ever punishment imposed by the FSA for breaches of its anti-money laundering rules. It is also the second highest ever FSA fine following a £4m penalty imposed on Credit
Suisse First Boston last year for tax-related failings.
The FSA said Abbey failed to report suspicious banking transactions quickly enough to the National Criminal Intelligence Service. Some 58 per cent of suspicious transactions took at least a month to reach NCIS.
Abbey also failed to carry out proper identity checks on new customers by asking them to bring in documents. About 32 per cent of new accounts had been opened without the correct documentation.
Part of the failures occured because Abbey allowed bank
branches to selfcertify them

selves as being compliant with FSA rules. Abbey was fined £2m for these breaches, which occured between 2001 and 2003.
It was also fined a further £320,000 because of compliance failures in Abbey Nat ional Asset Managers, the fund management arm. The regulator said weak systems resulted in he misconduct of a senior fund manager and Abbey has paid £800,000 compensation to a small number of clients as a result..!
The fines come after a difficult period for Abbey N ational which reported pre-tax lo Ps of £984m ,
9:~
in 2002 after a disastrous foray into corporate bonds. Yesterday shares fell by 8.75p to 527p.
Luqman Arnold, chief executive, said the bank had "lost the plot" in its core retail business in the late 1990s. He has pledged to "turn banking on its head" by differentiating Abbey from other high street banks through better customer service.
Abbey, which alerted the FSA after uncovering the failings in an internal review, yesterday stressed there was no evidence that actual money laundering had taken place. However it admitted the systems for check
ing customer identification had been inadequate. "Abbey is fully committed to putting all these issues right," it said.
Money laundering has moved to the top of the FSA agenda after it emerged in March 2001 that $1.3bn was laundered through 23 London banks by family and friends of the late Sani Abacha, the Nigerian dictator.
The FSA received new powers to tackle money laundering in December 2001 and can impose unlimited fines on any company and prosecute them for failures.
The FSA said Abbey had cooperated fully.