Financial Transparency Coalition

Global Witness welcomes news that the British regulator, the Financial Services Authority (FSA), has fined Coutts bank for failing to do enough to prevent corrupt funds from flowing through its accounts.

“This fine is an indicator that the FSA is finally starting to hold our banks to account for the role that they can play in facilitating corruption,” said Robert Palmer, a campaigner with Global Witness. “At the moment it is all too easy for corrupt politicians to bring their assets into the UK. For example, the Libyan government has had to go to court in order to recover a £10 million London house belonging to Saadi Gaddafi.”

The fine follows a review carried out by the FSA last year into whether UK banks are doing enough to make sure they don’t accept corrupt funds. In a damning review, the regulator found systematic failings across the sector:

• 75% of the 27 UK banks visited were failing in their legal obligation to identify the source of funds belonging to senior foreign politicians.
• One third of banks were happy to accept a very high risk that their customers were money laundering, if the immediate risk of being caught out was acceptable.
• A third of banks dismissed serious allegations about their customers without adequate review.

However, the FSA has said that following this review only five banks were going to be investigated formally. Today’s fine is the first result of this process.

“It is still incredibly rare for banks to get penalised for accepting the proceeds of corruption. We need more investigations, more fines, and in the worse cases, criminal penalties, to change bank behaviour. The FSA should investigate all of the banks that failed to carry out adequate checks,” added Palmer.

Global Witness calls on other countries to carry out similar investigations, and to fine banks that are failing to carry out the proper checks against corrupt funds.

Contact:

Robert Palmer on +44 (0)20 7492 5860 or +44 (0)7545 645406, rpalmer@globalwitness.org

Andrea Pattison on +44 (0)20 7492 5858 or +44 (0)7970 103 083, apattison@globalwitness.org.

Notes to the editors:

1. According to the FSA: “The failings at Coutts were serious, systemic and were allowed to persist for almost three years.  They resulted in an unacceptable risk of Coutts handling the proceeds of crime.”
2. In 2010 Global Witness revealed that HSBC, Barclays, Natwest, RBS and UBS had accepted millions of pounds for two Nigerian state governors who had been accepting bribes.
3. British aid to Nigeria is set to double by 2014. Global Witness believes the impact of UK taxpayers’ assistance to Nigeria is undermined when British banks facilitate corruption and the loss of Nigeria’s oil income.