Money-laundering fine a ‘stain’ on AIB’s record, says chairman

Richard Pym said breaches came at time when bank had ‘eye off the ball’

Richard Pym said AIB’s record on dealing with tracker mortgage redress was ‘another stain’. Photograph: Bryan O’Brien

Richard Pym said AIB’s record on dealing with tracker mortgage redress was ‘another stain’. Photograph: Bryan O’Brien

 

The €2.275 million fine levied against AIB by the Central Bank this week for breaching legislation designed to combat money laundering and terrorist financing represents a “stain” on the company’s record, its chairman told shareholders on Thursday.

Responding to a question at the bank’s annual general meeting in Dublin, AIB chairman Richard Pym said: “This is a stain on the firm but the bank is now in a much better place in terms of its controls.”

Mr Pym said the breaches, which relate to a period between July 2010 and mid-2014, came at a time when the bank was not in “good shape” and when AIB had its “eye off the ball” amid the fallout from the global financial crash.

“We think we have resolved these issues now,” he added.

The Central Bank began investigating the breaches in April 2015, which relate mostly to the bank’s EBS subsidiary.

The financial regulator found AIB guilty of six breaches of anti-money laundering laws, and legislation to ensure funding doesn’t make its way to terrorist organisations.

It said the breaches were the result of “significant failures” in AIB’s controls, policies and procedures.

This was the biggest fine levied against AIB by the Central Bank and followed a €3.325 million fine issued last year to Ulster Bank for similar breaches.

Tracker redress

In relation to the tracker mortgage redress issue, Mr Pym said this was “another stain on the company” but not on the current management team, which was not in place when the issues arose.

“That was another issue that wasn’t dealt with properly at the time,” Mr Pym said.

Last December, AIB said about 8,200 of its customers had been denied a tracker mortgage rate over the past decade or so. This emerged as part of an industry-wide review of mortgage books ordered by the Central Bank in late 2015.

At the time of its annual results in March, AIB said about 2,600 customers had already received redress, with the bank having spent €93 million up to that point to deal with the issue.

Mr Pym said it was “incredibly complicated” to get customers back to the position they should have been in originally with their mortgage loan, in addition to paying them compensation.

He said the €190 million sum set aside by the bank to cover the costs of this tracker issue had “proved adequate so far”.