FSA issues substantial civil penalty to financial services company

RL360 found to have contravened anti-money laundering and financing of terrorism code

A civil penalty of over £2.7 million has been imposed on an Island-based financial services company. 

The penalty from the Financial Services Authority on RL360 follows an inspection which identified a number of contraventions by the company in relation to its anti-money laundering and countering of financing of terrorism code.

The penalty was discounted by 30% to £1.95 million in recognition of the constructive and pragmatic dialogue with the company and its proactive action to bring about operational changes across its business to address the issues identified and take substantial steps to remediate matters.

The regulator says the scale of civil penalty reflects the level of cooperation by the company with the authority enabling a settlement to be agreed at an early stage.

As with all discretionary penalties issued by the FSA, the sum is calculated as a percentage of the company's relevant income at the time the contraventions were identified.

Among the contraventions of the code by RL360 uncovered during the FSA inspection was a failure within its Business Risk Assessment to independently assess money laundering and terrorist financing risks specific to each entity.

The company's Customer Risk Assessment process was found to lack sufficient detail, clarity and a clear methodology.

In some instances, high risk customers were incorrectly classified, or their assessments failed to incorporate all relevant risk factors, including jurisdiction and product risk.

RL360 was found to have conducted insufficient monitoring for high risk customers, and trigger event reviews were often not carried out or were insufficient.

This included neglecting to reassess customer review profiles customer risk profiles when changes occurred.

For some matters Customer Due Diligence and Enhanced Customer Due Diligence records were insufficient.

The FSA concluded that RL360's business relationships with certain high-risk jurisdictions were not properly documented or factored into the customer risk assessment process.

This impacted the company's ability to appropriately risk-rate customers and properly assess and manage risk.

The FSA ruling went on to outline a number of key learning points for the industry relating to their obligations under the anti-money laundering and countering the financing of terrorism code.