In a punitive measure to prevent financial sanctions placed on UK banks from being breached, RBS was slapped with a hefty £5.6 million fine by the Financial Services Authority for neglecting to have proper controls and preventative systems in place.
UK business banking firms are required by law to maintain procedures and policies that prevent them from providing any financial services, such as ISAs, to persons of interest on the sanctions list put out by the HM Treasury.
Despite these regulations several member groups of RBS failed to screen both their customers and payments going in and out against the list in an adequate manner during the 2008 calendar year. The RBS-controlled entities included NatWest, RBS Plc, Coutts and Co, and Ulster Bank.
The FSA states that these failings can be considered of particular seriousness because the integrity of the UK financial system as a whole have been endangered by the behaviour of RBS.
Margaret Cole, the FSA’s director of enforcement and financial crime, released a statement in which she said that the RBS group of banks left itself open to a very real risk of financing terrorist activities by neglecting to screen relevant payments and customers.
Ms. Cole added that the severity of the fine the FSA levied against the banking group is demonstrative of how seriously the regulatory agency perceives the issue, hoping that the punitive measures will warn off other financial firms from following RBS’s lead in using inadequate screening procedures.
This is not the first time this year that fines have been levied against RBS. This past May, the bank paid a $500 million fine as a settlement in a money laundering trial in the U.S.
The charges in the FSA case pertained to the RBS group’s acquisition of a smaller financial institution, ABN Amro, in 2007. ABN Amro had allegedly been flouting cash transfer sanctions on countries with terrorist organisation links such as Iran and Libya.