Jim Armitage: Scary what can lurk beneath the surface of a final notice

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The Independent Online

Outlook The kind of juice in the FCA's "final notices" can be of the most pungent kind.

Take the one last year on EFG Private Bank, discreet lender to the wealthy, when it was fined £4.2m for failing adequately to vet its customers. Safeguards against money laundering and "higher risk PEPs" were sadly lacking, the regulator ruled. PEPs? you ask. What risk can a tax-free savings product hold? Different kind of PEP. The ones the regulator was worried about were not Personal Equity Plans, but Politically Exposed Persons. These are politicians, senior military officers or civil servants from foreign (particularly dodgy) climes who pose a risk the bank could be receiving dirty money.

The regulator's final notice on EFG gave examples like the customer whose file at the bank suggested they had gained their cash from their father's business activities and connections. The FCA notice goes on: "Further research suggested that there were allegations that the customer's father had been connected to organised crime, money laundering and murder." Gulp. EFG accepted the business without providing sufficient info on how it had convinced itself he was kosher, the regulator said.

EFG points out there was no evidence money laundering took place, and that other private banks have also been done by the FCA for such failings, notably Coutts, which was hit with a £8.8m fine. However, it's notable that, according to the FCA's final notices, 12 per cent of EFG's customers posed a higher risk of corruption or moneylaundering compared with Coutts' 1 per cent. And 69 per cent of its customers hailed from foreign lands. In other words, it should have been more on the ball.

Anyway, why bring this up today when the fine on EFG was over a year ago? Because Companies House filings just pinged up that show no fewer than nine EFG Private Bank directors were "terminated" earlier this month. These include the Labour peer and EFG chairman, Lord Evans, son of the late Faber & Faber chairman George Evans.

EFG, based in Mayfair, of course, assures me the departures are nothing to do with the FCA fine, and that Lord Evans is nearly 73 and wanted to cut down on his commitments. All the other departing directors are remaining in the company elsewhere, a spokesman says.

Let's just hope the new board doesn't provide us with any more final notices to lap up.