FCA fines broker £6.5m for past AML failings

The FCA has handed a £6.5m fine to a broker, ADM Investor Services International (ADMISI), for inadequate anti-money laundering (AML) systems and controls.

ADMISI’s business and client base presented “potentially high levels” of money laundering risk, the regulator found, because of its business model, the geographical location of its customers, the proportion of its business involving high-risk clients and because it had had politically exposed persons as clients.

The FCA raised concerns with ADMISI in 2014 about its AML systems, including the absence of a formal process to classify customers by risk, and the firm was expected to make improvements.

However, during a 2016 firm visit, the FCA found significant failings remained.

In particular, the firm’s AML customer risk assessment was found to be basic and did not enable an assessment of a customer’s financial crime risk. It also did not conduct a firm-wide money laundering risk assessment, and there was little evidence of adequate monitoring in the form of periodic customer reviews.

After the 2016 visit, ADMISI agreed to requirements, including one not to take on business from high-risk customers in order to lessen the threat of the firm being used to launder money or finance crime. By the end of October 2016, ADMISI had introduced AML policies and procedures to address the concerns identified. After further remedial action the requirements were lifted by the FCA in January 2018.

Joint executive director of enforcement and market oversight at the FCA, Therese Chambers, said: “All financial firms need to have effective AML checks in place. ADMISI’s failures put it at risk of being used to facilitate financial crime. These failings continued even after the firm had received clear warnings on the need to improve its systems.”

ADMISI’s agreement to accept the FCA’s findings meant it qualified for a 30% settlement discount. Otherwise, the FCA would have imposed a financial penalty of £9.2m.

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