Al Rayan Bank, UK Fined for Anti-Money-Laundering Violations

Al Rayan Bank, a Sharia-compliant bank in the U.K., will pay a $4.9 million fine for failing to adequately monitor the source of its customers’ funds

Al Rayan Bank, the U.K.’s largest Islamic bank, will pay £4 million, equivalent to about $4.9 million, for failing to maintain sufficient money-laundering protections, regulators said Wednesday.

The fine stems from a two-year period during which the bank failed to perform required checks into the source of its customers’ wealth, according to the U.K. Financial Conduct Authority, which brought the regulatory action.

The penalty is the second that the FCA has levied this week for anti-money-laundering failures. The regulator on Tuesday imposed a £7.6 million fine on Guaranty Trust Bank UK Ltd., the U.K. subsidiary of Nigerian bank Guaranty Trust Bank PLC, for failing to undertake customer risk assessments.

Al Rayan is a subsidiary of Masraf Al Rayan, Qatar’s second-largest bank by market value. It has closed many of its retail branches in recent years, saying that clients prefer to access its services digitally.

The problems at Al Rayan, which occurred between 2015 and 2017, were aggravated by a lack of proper training for staff about how to handle large deposits. The bank was aware of the weaknesses in its anti-money-laundering program and failed to fix them, even after the FCA raised concerns, the regulator said.

After an inspection by the FCA in 2017, Al Rayan agreed not to take on additional high-risk customers. That restriction has been lifted, though the bank remains subject to some limited constraints, the FCA said Wednesday.

In a statement, Al Rayan Chief Executive Giles Cunningham said the bank cooperated with the FCA’s inquiry and that the fine wouldn’t have a material impact on its financials.

“Maintaining strong defenses against the evolving threats of financial crime is an essential part of our business plan and is being led by the new board and executive team,” Mr. Cunningham said.

Al Rayan received a 30% discount off its fine for agreeing not to dispute the regulator’s finding, the FCA said.

Originally published on www.wsj.com