UK financial regulator FSA today said it has fined the Royal Bank of Scotland Group 5.6 million pounds for its failure to put in place adequate systems and controls to prevent breaches of financial sanctions imposed by the government against certain entities and countries.
The Financial Services Authority (FSA) stated that certain members of the RBS Group -- RBS Plc, NatWest, Ulster Bank and Coutts and Co - failed to adequately screen their customers and the payments they made and received, as per the government's sanctions list between December 15, 2007, and December 31, 2008.
This resulted in an unacceptable risk that the RBSG could have facilitated transactions involving sanctions targets, including terrorist financing, the FSA statement said.
UK firms are prohibited from providing financial services to persons on the treasury sanctions list. The Money Laundering Regulations, 2007, makes it mandatory for firms to maintain appropriate policies and procedures to prevent funds or financial services being made available to those on the sanctions list.
This is the first fine imposed by the FSA under these regulations, the statement added.
"The involvement of financial institutions in providing funds, economic resources or financial services to designated persons on the sanctions list undermines the integrity of the UK's financial services sector," FSA Director of Enforcement and Financial Crime Margaret Cole said.
"By failing to screen relevant customers and payments against the HM treasury sanctions list, RBSG left itself open to the risk that it was facilitating terrorist financing," Cole added.
As the RBS Group agreed to settle the FSA investigation at an early stage, it has qualified for a 30 per cent reduction in penalty. The FSA would have otherwise imposed a financial penalty of eight million pounds, it said.