A compliance officer and an internal auditor at the Bank of Beirut (UK) Ltd misled the UK Financial Conduct Authority about steps taken by the bank to protect against financial crime.
The FCA fined Anthony Wills, the former compliance officer, £19,600 ($30,000). It fined Michael Allin, the internal auditor, £9,900 ($14,800).
The FCA said Wills and Allin “were influenced by senior management.” But their positions required them to resist the prssure, the FCA said.
The agency fined the bank £2.1 million ($3.15 million) and banned it from taking new customers for about four months.
The FCA said it had concerns about the culture within Bank of Beirut (UK) after supervisory visits in 2010 and 2011.
The regulator ordered the bank to strengthen its internal controls against financial crimes. Wills and Allin were responsible for the remediation and monitoring plans.
Wills, the compliance officer, handled most of the contact with the FCA. He downplayed FCA concerns and falsely confirmed that the changes the FCA ordered had been made.
Allin, the auditor, also “provided false assurance that the improvements to the firm’s processes had been made,” the FCA said.
Wills and Allin failed to deal with the FCA “in an open and cooperative way when responding to queries about the actions taken to mitigate financial crime risk,” the regulator said.
During the FCA’s investigation, Wills said the bank didn’t allot sufficient resources for him to do the compliance officer job. He said “at times he felt under pressure from senior management to be careful in his communications” with the FCA.
The FCA said it recognized that Wills “was influenced by comments made by senior management.” But the agency said the job pressures didn’t excuse his misconduct.
Georgina Philippou, the FCA’s acting director of enforcement and market oversight, said:
We are reliant on compliance officers and internal audit to act as an important line of defense, to support effective regulation at firms and to show backbone even when challenged by their colleagues.
Bank of Beirut (UK) settled early with the FCA. It had faced a fine of £3 million ($4.5 million) and a ban on new business for 180 days.
Wills and Allin also settled “at the first opportunity,” the FCA said. The FCA reduced their fines by 30 percent, the agency said.
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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.
2 Comments
This matter sounds similar to issues that compliance officers are having here in the United States, lack of resources and questionable compliance officer ethics. The lack of resources is one that every institution should be behind but because of greed, the powers that be don't see the forest for the trees. You can spend money now on your compliance function, get your house in order or you can spend a lot more later when you're paying your legal fees to your attorney for defending you from the Regulator; paying the huge fine that the Regulator imposed because you chose not to spend the money up front for the compliance resources; and then spending the money to clean up the problem and also put in place the systems. Let alone the reputational costs that the company will pay when news hits that you've been fined by the regulators.
As to the compliance officer ethics, we have to develop that "sixth sense" and realize that if the company hasn't given you the resources and they're leaving you with the kitchen sink of regulatory issues with no backing, then its time to leave as soon as possible. No job is worth it
According to the information given in the above case, there is undoubtedly a serious wrong and great mistake, in my opinion, to place the Compliance Officer (CO) and the Internal Auditor(IA) of the Bank of Beirut (UK) Ltd. and make them report to the Bank's Senior Management which may comprise any officer or executive higher in rank than the CO and IA. .The latter two officers are supposed to be the "gate-keepers" of the Bank. As such they must be accorded the authority to independently discharge their onerous duties and responsibilities to decide and advise the line officers on the risks to which any escalated transaction the Bank may be exposed. Lying per say constitutes a misconduct. By lying to the FCA and allowing financial crimes to be committed, it is tantamount to an abetment that warrants summary dismissal of the two recalcitrant officers from service. In my view the action taken against them with fines is just too lenient in the light of the severity o the committed misconduct.
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