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1.1. For the reasons given in this Notice the Authority has decided to impose on Standard Chartered Bank (“SCB”) a civil penalty of £102,163,200.
1.2. SCB agreed to settle in relation to all relevant facts and all issues as to whether those facts constitute breaches. SCB therefore qualified for a 30% (stage 1) discount under the Authority’s executive settlement procedures. Were it not for this discount, the Authority would have imposed a financial penalty of £145,947,500 on SCB.
2. SUMMARY OF REASONS
2.1. On the basis of the facts and matters described below, SCB breached Regulations 14(3), 15(1) and 20(1), and failed to comply with Regulations 7(1) to (3), 8(1) and (3), and 14(4) of the Money Laundering Regulations 2007 (the “ML Regulations”) by failing to establish and maintain risk-sensitive policies and procedures, and failing to require its non-EEA branches and subsidiaries to apply UK-equivalent antimoney laundering and counter terrorist financing (“AML”) standards regarding customer Due Diligence and ongoing monitoring.
2.2. The breaches concerned SCB’s financial crime controls in two areas of its business which SCB identified as higher risk:
a. SCB’s UAE branches in the period from 24 November 2009 to 31 December 2014 inclusive (the “Relevant Period”); and b. SCB’s correspondent banking business within its UK wholesale banking business in the period from 11 November 2010 to 22 July 2013 inclusive (the “CB Relevant Period”).
2.3. The Authority found serious, and sustained, shortcomings in SCB’s financial crime controls in the customer Due Diligence and ongoing monitoring carried out by SCB. For example, in one instance, SCB opened an account in the UAE for a consulate, funded with the equivalent of just over £500,000 brought into the UAE by the consul in cash, in a suitcase. SCB failed to adequately establish the source of funds and therefore to mitigate the increased risk posed by this transaction and this customer.
2.4. The Authority also found significant shortcomings in:
a. SCB’s own internal checks on its AML controls;
b. SCB’s approach towards identifying and mitigating material money laundering risks; and
c. SCB’s escalation of money laundering risks.