RBS lambasts 'draconian' money laundering fines

Fred Goodwin, the chief executive of Royal Bank of Scotland, condemned the UK's "draconian" penalties for lapses in the fight against financial crime yesterday.

Mr Goodwin said fines for procedural failures and omitting to report suspicious transactions were too severe and that the UK's largest lenders shouldered too much of the burden for stopping crime.

"Many of the penalties are so draconian that you might as well report every transaction," Mr Goodwin said at a meeting on financial crime at Royal Bank of Scotland's offices in London.

RBS was itself fined £750,000 a year ago by the Financial Services Authority for inadequate checks against money laundering, although the watchdog said there was no evidence that money laundering had occurred.

Regulators have strengthened rules to combat financial crime and block the financing of terrorist attacks. An estimated £25bn from the proceeds of crime are laundered in Britain each year, according to government figures.

The FSA told Britain's six biggest banks to check the identities of all their customers last year. But Mr Goodwin criticised the watchdog's decision not to extend the requirement to other financial companies. "What is being asked of the rest?" he said.