London’s Gatehouse Bank Fined £1.58M for AML Failures

The United Kingdom’s Financial Conduct Authority (FCA) has slapped a fine of more than £1.58 million on London-headquartered Gatehouse Bank for lapses in financial crime systems and controls.

Announced on Friday, the challenger bank now has taken significant steps to improve the slacks in its anti-money laundering (AML Anti-Money Laundering (AML) Anti-money laundering (AML) is a term that describes laws, processes, and regulations that are intended to prevent illegally obtained funds from being disguised as income gained through legitimate means. The fundamental purpose of the AML laws is to help safeguard, detect, and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.Most exchanges have AML measures that include identity verification Anti-money laundering (AML) is a term that describes laws, processes, and regulations that are intended to prevent illegally obtained funds from being disguised as income gained through legitimate means. The fundamental purpose of the AML laws is to help safeguard, detect, and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.Most exchanges have AML measures that include identity verification Read this Term) checks.

Founded in 2008, Gatehouse is a Shariah-compliant challenger bank, meaning it follows and adheres to the economic and financial rules of Islamic principles.

Major Lapses

According to the UK regulator, the challenger bank failed to conduct sufficient checks for money laundering Money Laundering Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Read this Term and terror financing between June 2014 and July 2017 while handling deposits from customers based in high-risk countries. The bank even failed to properly undertake checks for some of the politically-exposed customers.

The FCA detailed that the lender once opened an account for a Kuwait-based company for aggregating customer funds. Though Gatehouse had AML policies in place, it did not require the collection of crucial information like customers’ source of funds or wealth for that case. As such, the bank received $62 million in deposits from customers for two years without any necessary checks.

“Gatehouse Bank’s failures exposed itself to the risk that it might be used as part of a laundering process for illegal funds,” said Mark Steward, FCA’s Executive Director of Enforcement and Market Oversight.

“While not deliberate, there can be no excuse for failures as serious as this. The FCA will continue to hold firms to account for poor anti-money laundering systems and controls.”

Gatehouse is one of the many banks that were fined by the FCA for failure in AML checks. Earlier this year, the watchdog fined The TJM Partnership, a company under liquidation, £2 million, and Ghana International Bank £5.8 million for similar lapses. However, a significant penalty was imposed last year when NatWest had to cough up £264.8 million.