INSUBCONTINENT EXCLUSIVE:
Canara Bank has been blocked in the UK from accepting new deposits for around five months
Britain's
markets regulator has fined the UK division of Canara Bank 896,100 pounds ($1.2 million) and blocked it from accepting new deposits for
around five months for systemic anti-money laundering (AML) failures
The Financial Conduct Authority (FCA) said on Wednesday that the control failures at the UK division of Canara Bank, India's fifth largest
state-run lender by assets, affected almost all levels of its business and governance structure, including senior management.The division's
AML risk management and governance framework had been not fit for purpose, risking undermining the integrity of the UK financial system -
despite regulatory warnings since 2012 that its systems needed fixing, the FCA said."Canara was warned its money laundering controls were
inadequate and so its failure to remediate them properly is at the more serious end of the range of sanctions," said Mark Steward, the FCA's
head of enforcement and market oversight.The bank had seconded staff from its head office in India to fill senior management positions in
the UK who did not properly understand British legal and regulatory AML requirements, leading to a "consistent failure" to implement
adequate systems and controls, the regulator said.Canara Bank said it had now resolved the problems."The FCA has acknowledged the
deficiencies have been rectified," said Krishna Kant, the head of compliance in London.The bank's UK division was alerted to a number of
problems after British regulators visited the bank in November 2012 and March 2013
But a third visit in April 2015 found remedial action insufficient - and the bank had also failed to embed "a culture of compliance" with
regulatory requirements, the FCA said.Regulators appointed a so-called "Skilled Person" in September 2015, a process that brings in
independent experts to assess a business when watchdogs suspect a firm has governance or other weaknesses.The Skilled Person's report on
January 2016 highlighted failures such as an AML risk management that was "not fit for purpose" and an inability by the bank to identify or
flag unusual transactions or recognise PEPs - politically exposed people whose public status can make them vulnerable to corruption."These
failings were endemic throughout Canara's UK operations, affecting almost all aspects of its business and suggested that Canara may not be
fit and proper," the FCA said."Such weaknesses potentially undermine the integrity of the UK financial system by significantly increasing
the risk that Canara could be used for the purposes of domestic and international money laundering, terrorist financing and those seeking to
evade taxation or the implementation of sanction requirements," it said.The regulator noted that Canara Bank had made significant
investments in improving systems and oversight, increased training and brought in external consultants
Thomson Reuters 2018(This story has not been edited by TheIndianSubcontinent staff and is auto-generated from a syndicated feed.)
