FCMC imposes the 906 610 euro fine and a number of legal obligations on Signet Bank AS

The FCMC carried out an on-site inspection of Signet Bank AS in the AML area, as well as an on-site targeted inspection to examine compliance with the AML regulatory requirements when starting business relations with individual customers and carrying out customer due diligence and transaction monitoring.

During the inspections, the FCMC identified breaches and deficiencies related to inappropriate Bank’s internal control system, customer base risks and risk management.

The FCMC identified following irregularities in the activities of the Bank:

• the Bank had not taken sufficient measures to make certain that a beneficial owner indicated by the customer subject to due diligence, indeed was the beneficial owner;
• the Bank had not verified the origin of financial means in its customers’ accounts, obtaining documents that certify the origin of financial means, and had not documented conclusions on the findings;
• the Bank had failed to timely ensure high-quality customer due diligence and documentation of its findings;
• when carrying out customer due diligence and transaction monitoring the Bank had failed to give sufficient weight to the unusually large, complex, inter-related transactions and failed to verify and document a reasoned judgement regarding legal and economic substance of such inter-related, complex business schemes;
• the Bank had failed to classify individual customers as shell companies in line with the AML regulatory requirements.

The FCMC concludes that the Bank has not established an AML internal control system adequate to its operational risks that would ensure effective enforcement of the AML regulatory requirements and ensure the AML risk management in the Bank.

The explanations by the Bank’s management did not provide the FCMC with assurance that the Bank had fully understood the nature of irregularities and would change its approach, thereby ensuring the prevention of breaches and adequate functioning of its internal control system. The FCMC therefore concludes that the Bank does not recognize the infringements and agrees to make changes to its conclusions only because of the opinion of the FCMC. However, the FCMC expects the Bank to ensure compliance with laws not only formally, but by nature in order to address the AML risks.

The Bank has to assess its internal control system in the field of AML and improve its functioning and effectiveness. In accordance with the FCMC’s decision the Bank must submit to the FCMC an action plan to address the breaches and shortcomings identified.
The Bank must perform an independent assessment of compliance and efficiency of the Bank’s internal control system in the AML area involving a sworn auditor or sworn auditors firm.

At the same time, the FCMC takes note of the progress made by the Bank in addressing the shortcomings identified by the FCMC.

The fine of 85% of maximum statutory amount has been applied to the Bank, i.e. 10% of the Bank’s total annual turnover. The Bank shall pay the fine into the State budget within one month from the date of entry into force of the administrative act.

Further information:
Airisa Ādamsone
Public Relations Specialist
FCMC Communications Division
Phone: +371 67774807
E-mail: airisa.adamsone@fktk.lv