Financial crime due diligence failures will now be punished more harshly than ever

Bankers need to get over the embarrassment factor of asking where money has come from

 Commenting on the FCA’s announcement that it was fining Barclays £72 million for insufficient due diligence when entering into a transaction with a Politically Exposed Person, Richard Burger, Partner at City law firm, RPC, says:

“The size of this fine puts financial crime firmly back on the compliance agenda.”

“If ‘British reserve’ means not asking questions about the origin of counterparties’ wealth then it is an outmoded concept. We, in particular those in Financial and Professional Services, need to get over the embarrassment factor of asking difficult or perceived inconvenient questions.”

“The regulator has made it clear time after time that failure to undertake rigorous due diligence is unacceptable. The size of this fine was deliberately over and above the profit generated by the transaction, suggesting that the regulator has this type of financial crime failure in its crosshairs. The FCA is fed up with institutions not engaging on financial crime risks.”

“In dealing with Politically Exposed Persons and other financial crime risks, the City needs to police itself effectively or institutions will continue to face breathtaking fines.”

“That a potential client is uncomfortable, unwilling, or unable to disclose the source of his or her funds should be enough of a red flag to alert the institution that they should be engaging in enhanced due diligence.”