Thursday, 28 July 2011

http://www.independent.co.uk/news/business/news/fed-orders-rbs-to-improve-controls-on-money-laundering-2327161.html

The Federal Reserve has ordered the Royal Bank of Scotland Group to improve controls to prevent money laundering at its US operation, giving it 60 days to submit a written plan outlining its improvements.

A year after Britain's Financial Services Authority levied a £5.6m fine on RBS for failing to adequately screen customers to prevent its banks from being used for money laundering or the financing of terrorists, the bank is under fire for broadly the same reason in the United States.

The Federal Reserve announced yesterday that it had served RBS with a "cease and desist" notice, alleging it failed to implement adequate controls and supervision of its operations. The regulator declined to specify where the problem lay, but it is understood that the Federal Reserve was referring to potential money laundering and that its concerns related to RBS business across the US, including the American operations of ABN Amro, which the group bought in 2007.

RBS sought to play down its significance last night, although it is extremely rare for the Federal Reserve to issue such as notice.

Stephen Hester, RBS's chief executive, said: "We set and expect higher standards than those that resulted in this order. RBS is well advanced in addressing the deficiencies noted by the US banking authorities and in continuing to upgrade our governance and compliance systems throughout the group."

RBS is now working on a plan showing how it will "strengthen board and senior management oversight of the corporate governance, management, risk management and operations" of the group, the Fed said. The bank must show how it will improve "effective control over and supervision of the US operations' corporate governance", it added.

The FSA's fine for RBS was the largest ever levied by the regulator under its powers to clamp down on financial crime.