The United Kingdom’s Financial Conduct Authority (FCA) has slapped a fine of more than £1.58 million on London-headquartered Gatehouse Bank for lapses in financial crime systems and controls.

Announced on Friday, the challenger bank now has taken significant steps to improve the slacks in its anti-money laundering (AML ) checks.

Founded in 2008, Gatehouse is a Shariah-compliant challenger bank, meaning it follows and adheres to the economic and financial rules of Islamic principles.

Major Lapses

According to the UK regulator, the challenger bank failed to conduct sufficient checks for money laundering and terror financing between June 2014 and July 2017 while handling deposits from customers based in high-risk countries. The bank even failed to properly undertake checks for some of the politically-exposed customers.

The FCA detailed that the lender once opened an account for a Kuwait-based company for aggregating customer funds. Though Gatehouse had AML policies in place, it did not require the collection of crucial information like customers’ source of funds or wealth for that case. As such, the bank received $62 million in deposits from customers for two years without any necessary checks.

“Gatehouse Bank’s failures exposed itself to the risk that it might be used as part of a laundering process for illegal funds,” said Mark Steward, FCA’s Executive Director of Enforcement and Market Oversight.

“While not deliberate, there can be no excuse for failures as serious as this. The FCA will continue to hold firms to account for poor anti-money laundering systems and controls.”

Gatehouse is one of the many banks that were fined by the FCA for failure in AML checks. Earlier this year, the watchdog fined The TJM Partnership, a company under liquidation, £2 million, and Ghana International Bank £5.8 million for similar lapses. However, a significant penalty was imposed last year when NatWest had to cough up £264.8 million.

The United Kingdom’s Financial Conduct Authority (FCA) has slapped a fine of more than £1.58 million on London-headquartered Gatehouse Bank for lapses in financial crime systems and controls.

Announced on Friday, the challenger bank now has taken significant steps to improve the slacks in its anti-money laundering (AML ) checks.

Founded in 2008, Gatehouse is a Shariah-compliant challenger bank, meaning it follows and adheres to the economic and financial rules of Islamic principles.

Major Lapses

According to the UK regulator, the challenger bank failed to conduct sufficient checks for money laundering and terror financing between June 2014 and July 2017 while handling deposits from customers based in high-risk countries. The bank even failed to properly undertake checks for some of the politically-exposed customers.

The FCA detailed that the lender once opened an account for a Kuwait-based company for aggregating customer funds. Though Gatehouse had AML policies in place, it did not require the collection of crucial information like customers’ source of funds or wealth for that case. As such, the bank received $62 million in deposits from customers for two years without any necessary checks.

“Gatehouse Bank’s failures exposed itself to the risk that it might be used as part of a laundering process for illegal funds,” said Mark Steward, FCA’s Executive Director of Enforcement and Market Oversight.

“While not deliberate, there can be no excuse for failures as serious as this. The FCA will continue to hold firms to account for poor anti-money laundering systems and controls.”

Gatehouse is one of the many banks that were fined by the FCA for failure in AML checks. Earlier this year, the watchdog fined The TJM Partnership, a company under liquidation, £2 million, and Ghana International Bank £5.8 million for similar lapses. However, a significant penalty was imposed last year when NatWest had to cough up £264.8 million.