Turkish Bank (UK) Ltd – three down, two to go

Turkish Bank (UK) Ltd (TBUK) breached the Money Laundering Regulations 2007 around correspondent banking relationships for more than two and a half years, according to the UK Financial Services Authority, which has fined it UK£294,000.

Timon Molloy, Editor (timon.molloy@informa.com)

In the wake of the thematic review of banks’ AML controls for high money laundering risk situations, the regulator examined all 15 of TBUK’s relevant respondent files and discovered failings for the period 15 December 2007, when the MLR 2007 came into force, to 3 July 2010. FSA found “erroneous and inconsistent policies” around risk assessment of correspondent relationships with institutions in Turkey and Northern Cyprus. Nine with Turkey were incorrectly designated low risk, although the country was outside the EU. The TBUK AML handbook wrongly treated Turkey’s AML regime as equivalent on the basis that it was a member of the Financial Action Task Force (FATF). The same section noted the country’s exposure to the drugs trade, both as a producer and conduit. FSA also points to the FATF Third Mutual Evaluation Report for Turkey, published in February 2007, which recorded widespread non-compliance with the 40+9 Recommendations, including lack of requirements for enhanced due diligence (EDD). In August 2008, the Joint Money Laundering Steering Group (JMLSG) observed, specifically, that Turkey was not EU-equivalent and that firms would need to carry out their own due diligence.