Abbey National fined £2.32m

Abbey National was today fined £2.32 million for breaches of money-laundering rules and other serious regulatory failings.

The fine by the chief City regulator, the Financial Services Authority, was the biggest ever against a British bank and the second biggest in FSA history as well as the largest for a breach of money-laundering rules.

In a strongly worded ruling, the FSA said Abbey "demonstrated a marked lack of regard for its regulatory obligations" and had allowed the failings to continue over a prolonged period.

Although there was no evidence of actual money laundering, Abbey failed to take suspicious transactions seriously and failed to report them to the National Criminal Intelligence Service, the FSA said.

It also failed to take adequate steps to check the identity of its customers. Under anti-moneylaundering rules, banks are obliged to maintain proper systems to identify and report suspicious account openings and transactions.

The Government regards the rules as a key weapon in the fight against international terrorism and illegal drugs.

The fine included a £2 million penalty for breaches of the money laundering rules and a further £320,000 fine for failings in its asset management division, which manages money on behalf of hundreds of thousands of small investors.

FSA director of enforcement Andrew Procter said: "The size of the fine demonstrates that failure by firms to put in place these fundamental systems and controls will be dealt with severely by the FSA. It reflects the importance the FSA attaches to its statutory objective of reducing the chance of regulated firms being used for purposes connected to financial crime."

The penalty follows a £1.25 million fine against Northern Bank and one of £750,000 against Royal Bank of Scotland for other moneylaundering offences. The largest FSA fine was a £4 million meted out to the investment bank Credit Suisse First Boston for misleading Japanese tax authorities.

The fine for Abbey National is embarrassing as the company is in the process of changing its name to Abbey in a multi-millionpound campaign underlining a new customer-friendly image.

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