Wednesday, October 28, 2020

Malta fines Fimbank $199,240 over weak anti-money laundering controls


Fimbank has been fined €168,943 by the Financial Intelligence Analysis Unit (FIAU) for “serious shortcomings” in its anti-money laundering obligations.

As a result of a 2018 inspection of the bank, the FIAU found Fimbank’s risk assessment tools did not account for all the countries its clients were dealing with.

The FIAU said the compliance examination also identified weaknesses in the bank’s ability to retrieve records in an efficient manner. The FIAU deemed that the bank’s record-keeping measures were not adequate for the bank to completely satisfy its record-keeping obligations.

Serious shortcomings were found when it came to the bank’s obligation to scrutinise its clients’ transactions.

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The FIAU found Fimbank failed to adopt an adequate transaction monitoring system to effectively scrutinise transactions.

While the bank had transaction monitoring measures in place, the FIAU said the measures were not proportionate to Fimbank’s activities.

The FIAU said at times single payments passing through the bank’s accounts exceeded €13 million, whereas in other cases, the transactions did not tally with the customer profile, with the bank failing to thoroughly scrutinise the transactions that were taking place.

Zooming in on one particular transaction, the FIAU found a client was loaned money to buy a vessel, yet the vessel was actually bought by a third party.

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Following refurbishment works, the vessel was sold on, however, all the funds from the sale were sent to the Fimbank client instead of the company that bought it.

The FIAU said the bank did not question the actual reason for this particular arrangement, but relied on its understanding that these were intra-group transactions, and this even though there was adverse media available on the company from which the vessel had been originally acquired.

It was noted by the FIAU that remedial action was already being undertaken by the bank at the time of the 2018 compliance review.

The FIAU added that Fimbank has already started implementing measures to address the other breaches.

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