Money Laundering, Terrorism and Financial Institutions - USA Patriot Act Monitor

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4/6/2004 USA PATRIOT Act Monitor News Release: FSA Fines Branch of Austrian Bank

The Financial Services Authority has announced that it has fined the London Branch of Raiffeisen Zentralbank Österreich (RZB) £150,000 for breaches of the FSA's money laundering rules. According to the Final Notice provided the bank:

The FSA's investigation found that RZB London failed to act promptly to update its anti-money laundering (AML) and compliance manual, last updated in 1999, to reflect the introduction of the FSA's Money Laundering Rules in 2001. RZB London's compliance manual did not include sufficient assistance to staff to enable them to comply with identification requirements for certain categories of customers. This exposed RZB London to an unacceptable risk that it would be used to launder money.

The fine was imposed for breaches of Rules 2.1.1 and 3.1.3 of the FSA's Money Laundering Sourcebook. Rule 2.1.1 requires covered institutions to appoint a money laundering reporting officer, while Rule 3.1.3 requires that a firm “must take reasonable steps to find out who its client is by obtaining sufficient evidence of the identity of any client who comes into contact with the relevant firm to be able to show that the client is who he claims to be. For 23 accounts opened since the introduction of the FSA's Money Laundering Sourcebook, RZB London had failed to take the steps required to verify that the client was who he claimed to be. Two accounts were opened by private corporate companies, one of which was from the Turks and Caicos Islands, “which does not have in place anti-money laundering requirements that are equivalent to those operating in the UK. Also, a bank from one of the FATF list of non-cooperative countries (NCCT) was not properly identified, though the FSA acknowledged that the country had been removed from the NCCT list before any transactions were conducted by the bank. The case will be analyzed in detail in the next issue of the USA PATRIOT Act Monitor.

The USA PATRIOT Act Monitor and the news releases prepared by the Monitor staff are services of the Civic Research Institute, publisher of Money Laundering, Terrorism, and Financial Institutions, by Raymond Banoun and John Ensminger. Contact and subscription information may be obtained at or by calling the Civic Research Institute at 609-683-4450 (fax: 609-683-7291).

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