Bank of Ireland has been fined €3.15 million by the Central Bank for breaches to laws aimed at countering money laundering and terrorist financing, including the failure to report six suspicious transactions to the Garda and Revenue Commissioners promptly.
According to Derville Rowland, director of enforcement at the Central Bank: "The high volume and range of breaches uncovered as part of the Central Bank's investigation into Bank of Ireland point to significant weaknesses in the strength of Bank of Ireland's implementation of anti-money laundering and counterterrorist financing legislation.
“Such behaviour is unacceptable and falls far short of the standard expected of one of Ireland’s largest retail banks.”
It marks the second-largest penalty issued by the Central Bank in relation to the Criminal Justice (Money Laundering & Terrorist Financing) Act, 2010. Ulster Bank was fined €3.325 million last November and AIB was ordered last month to pay €2.275 million for similar violations.
Bank of Ireland’s admitted to breaches between July 2010 and December 2015.
These include not carrying out adequate assessments of risks of accounts being used for money laundering or terrorist financing and putting in proper mitigating systems and controls, according to the regulator.
Money laundering and terrorist financing have become a key area of focus for regulators globally recently, with authorities from South Africa to Canada levying multimillion euro fines in the past year for weak anti-money laundering and counterterrorism controls.
“The fine . . . in this case relates to control breaches and not actual money laundering or terrorist financing activities,” a spokesman for Bank of Ireland said.
The Central Bank found Bank of Ireland failed to carry out sufficient due diligence on an unnamed bank outside the EU, which used it for financial transactions locally.
This type of activity, known as correspondent banking, carries a high risk as the domestic bank has limited information on the purpose of financial services it has agreed to carry out for an overseas lender.
The regulator’s investigation also uncovered failings in relation to Bank of Ireland’s requirement to know its customers.
Specifically, the bank, which remains 14 per cent State owned after the financial crisis, did not apply sufficient customer checks on an overseas “politically exposed person” to determine their source of funds and wealth.
A politically exposed person can be defined as an individual who is, or has at any time in the preceding year, been entrusted with a prominent public function.
A spokeswoman for the regulator and spokesman for the bank declined to identify the individual in this instance. Bank of Ireland said it takes its regulatory obligations seriously and regrets that these issues arose.