Bank of Scotland, part of the HBOS group, was yesterday hit with a £1.25m fine by the Financial Services Authority for failing to be vigilant about the risk of money laundering.
Bank of Scotland was unable to hand over crucial information about the identity of customers in 55 per cent of cases when questioned by the FSA.
Banks demand new customers provide passport and utility-bill details when they open accounts to prove they are who they say they are. While Bank of Scotland collected the information when accounts were opened, it failed to keep it on file in case at a later date the police, investigating possible money-laundering allegations, needed to refer to it.
Andrew Procter, the FSA's director of enforcement, said: "The failure of Bank of Scotland to keep proper records of customer identification could have seriously undermined its ability to comply with the requirements of orders served by law enforcement agencies."
The Bank of Scotland fine is the latest sign that the City watchdog is cracking down on laxness among UK banks in their monitoring of possible money laundering.
Abbey was fined £2m last month after its branches did not check customers' identity properly and it took too long in reporting suspicious incidences to the National Criminal Intelligence Service. Northern Bank, based in Ulster and part of National Australia Bank, has also been fined £1.25m and Royal Bank of Scotland had also had to hand over £750,000.
Bank of Scotland said there was no evidence money laundering through its branches had taken place. It said it "regretted this error and is working with the FSA in the fight against money laundering".Reuse content