RBS fined £5.6m over control failings

4 August 2010

The Royal Bank of Scotland Group (RBSG) and various members have received a fine of £5.6 million for failing to implement adequate systems to prevent UK financial sanctions from being compromised.

An investigation by the Financial Services Authority (FSA) found that, despite processing the largest volume of foreign payments during 2007, RBSG did not sufficiently screen customers and their payments against the Treasury’s sanctions list.

UK firms are required to review this data, as they are not allowed to provide financial services to named persons.

As such, the FSA claimed that in the year between December 2007 and December 2008, RBSG’s lack of systems meant the UK was exposed to an “unacceptable risk”, which could have included the financing of terrorists.

Margaret Cole, FSA director of enforcement and financial crime, said: "The involvement of UK 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.

“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.”

RBSG agreed to settle during the early part of the FSA's investigation, which entitled it to a 30 per cent discount on the size of the penalty.

By Jim Ottewill

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