Client Alert
Anti-Money Laundering Lessons to be Learnt from the Commerzbank Fine
July 21, 2020
By Arun Srivastava & Gesa Bukowski
With the hefty £37.8 million fine imposed on Commerzbank AG’s London branch last month (and an accompanying strong deterrent message for the market more generally), the UK Financial Conduct Authority (FCA) have signalled their intention to continue to come down hard on firms’ breaches of anti-money laundering obligations.
Increased AML enforcement risk
The June 2020 announcement of the Commerzbank penalty comes following a series of signs indicating an increased risk of enforcement by the FCA in UK AML cases. The FCA’s 2020/21 Business Plan notes that it will continue to take enforcement action in financial crime matters where the FCA uncovers serious misconduct, “particularly where there is a high risk of money laundering.”
In a speech given in April 2019, the FCA’s Director of Enforcement, Mark Steward, said that “I think it is time that we gave effect to the full intention of the Money Laundering Regulations which provides for criminal prosecutions”. The speech was foreshadowed by the FCA signalling that it intended to pursue more dual-track money laundering investigations, meaning that the Authority would pursue running both civil and criminal investigations side-by-side. This shift raised prospects of an increased likelihood of criminal prosecution for breaches of procedural AML obligations, whether or not those breakdowns actually facilitated any substantive money laundering.
Taken together, these developments confirmed the risk of enforcement action where the regulator identifies breaches either of a company’s systems and controls (“SYSC”) requirements or breaches of the Money Laundering Regulations 2007 (“ML Regulations”). In particular, regulated firms are under increased risk of criminal prosecution and fine for procedural breaches which would otherwise be subject to a civil or administrative sanction.
The fact that the FCA have imposed a significant fine on Commerzbank for breaches of anti-money laundering (“AML