GTBank Pays Elevated UK Fine For Not Fixing Prior AML Failures

January 11, 2023
The Financial Conduct Authority has fined Guaranty Trust Bank £7.6m for serious weaknesses in its anti-money laundering (AML) systems and controls.

The Financial Conduct Authority (FCA) has fined Guaranty Trust Bank (GTBank) £7.6m for serious weaknesses in its anti-money laundering (AML) systems and controls.

According to the UK regulator, GTBank did not assess the AML risks of its customers properly or failed to document their money laundering risks between October 2014 and July 2019.

AML control weaknesses include a range of failures, such as the failure to carry out adequate customer due diligence and enhanced due diligence, failure to verify the source of wealth for higher-risk customers and to monitor customer relationships on an ongoing basis.

The FCA said the bank’s conduct was “particularly egregious” as this was not the first time that the bank has faced enforcement action in relation to its AML controls.

In August 2013, GTBank paid a £525,000 fine for serious and systemic AML failings.

Later on, weaknesses were repeatedly highlighted to GT Bank by internal and external sources, including the FCA, but the bank did not take action to properly fix those issues.

In 2018, GTBank stopped taking on new customers and, later that year, agreed to wider voluntary restrictions on business, due to the FCA’s ongoing concerns.

These requirements remained in place until the middle of 2021 when they were lifted after the bank completed a remediation plan, checked by an independent third party.

“The authority considers this repeated misconduct to be a direct result of the inability of the senior management within GTBank, over a prolonged period of time, to formulate and implement an effective plan capable of addressing the weaknesses identified within its AML and financial crime systems and controls,” the final notice says.

The FCA acknowledged that GTBank spent “considerable time and resources” trying to fix customer files to make them compliant with regulatory requirements, but the progress remained “slow and for too long standards remained below those required”, the regulator said.

“GTBank should have acted quickly to put in place adequate AML controls following its fine in 2013 but it failed to do so,” said Mark Steward, executive director of enforcement and market oversight at the FCA.

“GTBank did not develop a plan that was capable of addressing its AML weaknesses, exposing it and the broader market to financial crime risks for a prolonged period,” he added.

The FCA significantly increased the penalty on GTBank because the failures mirrored previous bad conduct. At the same time, the agency entered into a settlement agreement with the bank, which meant a 30 percent discount on the fine.

As a result, GTBank will have to pay a £7.7m fine for the ongoing misconduct.

“The FCA is determined to ensure the market for financial services is safe, clean and trusted with robust systems and controls in place to stymie financial crime. The FCA will continue to take action when these standards are not met,” according to Steward.

Commenting on the issue, Gbenga Alade, managing director of GTBank UK, said the bank notes “with sincere regret the FCA’s findings regarding AML control gaps in our operations in the past and we are very sorry for this”.

He added that the bank had taken steps to address and resolve the identified gaps. “As a responsible financial services institution that is committed to best practices, GTBank UK takes its AML obligations extremely seriously.”

At the same time, the managing director emphasised that the FCA’s findings do not include any instances of suspected money laundering.

GTBank is part of the Nigerian multinational financial services institution Guaranty Trust Bank Holding Company and provides a range of banking services across Africa and the UK. According to the FCA, its main focus is on mortgage products and the bank’s stated aim is to be the premier African bank for non-UK resident Africans.

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