Commerzbank hit with £37m fine over money laundering failures

Commerzbank's London branch has been slapped with a £37.8m fine by UK regulators for failing to implement satisfactory anti-money laundering (AML) systems and controls between October 2012 and September 2017.

The Financial Conduct Authority (FCA) said Commerzbank was “aware of these weaknesses and failed to take reasonable and effective steps to fix them" despite raising specific concerns about them in 2012, 2015 and 2017. In return for admitting the failings the fine was reduced by 30%.

“Commerzbank London’s failings over several years created a significant risk that financial and other crime might be undetected,” said FCA enforcement and market oversight director Mark Steward.

The FCA’s investigation identified failings in a number of areas, including Commerzbank’s failure to conduct timely periodic due diligence on its clients, which resulted in a significant number not being subject to timely "know-your-client checks" to the point where an exceptions process, which was not controlled or overseen, became "out of control" by the end of 2016.

Commerzbank also failed to fix a long-standing weaknesses in its automated money risk monitoring tool on transactions for clients, the FCA said, citing a 2015 example where the bank identified that 40 high-risk countries were missing, and 1,110 high-risk clients had not been added.

In response to the FCA probe, Commerzbank voluntarily implemented a wide-ranging business restriction, which included temporarily stopping taking on new high-risk customers and suspending all new trade finance business activities.

Eoin O’Shea, a partner at the law firm Reed Smith, said: "The case demonstrates two important trends. The first is the continuing appetite of the FCA for enforcement in the 'quasi-criminal' area of standards and controls which impact on potential criminality by third parties. The second is the trend towards cooperation by banks and other large corporates under investigation in exchange for reduced penalties."