Money 'laundering' at the Queen's bank: Coutts fined £8.75m for taking despots' millions

Daily Mail, by Becky Barrow, Business Correspondent, 27 March 2012

 

Coutts, the Queen’s bank, has been fined £8.75million for ‘serious and systematic’ failings when handling money from suspected criminals or foreign despots.

City regulators criticised the 320-year-old private bank for taking ‘an unacceptable risk of handling the proceeds of crime’.

The fine, imposed by the Financial Services Authority, is a record amount for a money laundering offence.

Coutts has been fined £8.75million for 'serious and systematic' failings
when handling money from suspected criminals or foreign despots

An original penalty of £12.5million was cut by 30 per cent as Coutts agreed to settle at an early stage.

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It could be followed by fines for four other banks referred to the FSA for similar offences. 

Embarrassment: The Queen is
a customer of the bank

Coutts is owned by the Royal Bank of Scotland, which is 82 per cent taxpayer-owned.

Yesterday Lord Oakeshott, a leading Lib Dem peer, criticised the actions of Coutts.

He said: ‘Taking dirty money from foreign despots is unacceptable behaviour from any British bank, but it is beyond belief when it is RBS. How can Stephen Hester and RBS’s management dream of taking bonuses when they preside over this systemic and widespread “ask no questions” culture at Coutts?’

Between 2007 and 2010 staff at the bank, which accepts new customers only if they have at least £1million to invest, failed to check the source of funds when prospective clients tried to open accounts.

As a result, money could have come from high-risk countries including Libya, Syria and Zimbabwe, sources at the  FSA revealed.

The FSA first visited Coutts in October 2010 as part of its review into how banks were managing situations in which there was a high risk of money laundering.

‘Coutts’ failings were significant, widespread and unacceptable,’ said Tracey McDermott, the FSA’s acting director of enforcement and financial crime.

‘Its conduct fell well below the standards we expect and the size of the financial penalty demonstrates how seriously we view its failures.’ The FSA’s judgment rubbishes the bank’s exclusive reputation 

LibDem peer Lord Oakeshott
 fiercely criticised the 'ask no
questions' culture at Coutts

In two cases, its report says: ‘Private bankers did not conduct appropriate checks on the customers and, as a result, failed to identify serious criminal allegations against those customers.’

In five other cases, there were ‘allegations of misappropriation of state funds and close business and/or personal associations with individuals wanted by law authorities. In two such cases, there were current international arrest warrants in force’.

The FSA’s report is also critical of the fact bankers at Coutts were eager to win new business and secure a bigger bonus.

The report states: ‘Performance appraisals and bonus awards would, in part, be determined by whether they had met their targets.’

Coutts said it has ‘exited a small number of clients’ since the probe but a spokesman insisted: ‘We have found no evidence money laundering took place.’

Rory Tapner, chief executive of the wealth division of RBS, said the bank was ‘disappointed’ it failed to meet the regulator’s standards.