“This is a significant ruling by the FCA. Despite acknowledging that the bank’s exposure to risk was not deliberate, the regulator still imposed a substantial fine, saying there were no excuses for serious failures.
“This serves as a sharp reminder to all financial organisations that unintentionally breaching the rules is not a defence. The fines and reputational damage were still meted out. And, had the bank not settled early in the investigation, the amount would have been £2.2m.
“The bank also failed to carry out the correct checks on customers classed as politically exposed persons (PEPs). With thousands of individuals and entities added to sanctions lists this year, this shortcoming underlines the difficulty of verifying clients – new and existing – in an ever-changing sanctions landscape.
“Electronic verification is the most effective way for regulated firms like Gatehouse to identify new customers and monitor existing ones as well as provide evidence of a robust sanctions screening process.”
Martin Cheek, managing director of SmartSearch