Signet bank is a private bank that makes a lot of its "tailor-made" approach to its wealthy client list. "Prosperity loves discretion" and "wealth loves silence" its website declares, adding
"We believe in absolute confidentiality as a core value of banking business. Be it [the] amount of investment gold in your private safe in our vault, large fiduciary deal or just a personal detail, it stays between two persons: you and your private banker. Our location in so called Silent Centre of the city is not a coincidence. It states the value of discretion," the bank says.
"We proudly say no to any shady transaction, not-so-transparent deal, incomplete documentations and untrusty agendas. Because we believe that every our client deserves a bank with brilliant reputation," it adds.
However, now the bank is subject to a number of very public legal obligations, including the submission of an action plan for addressing breaches and shortcomings identified and carrying out an independent review of efficiency and compliance of internal control system with the AML regulatory requirements.
The FKTK carried out an on-site inspection of Signet Bank concerning AML, as well as a targeted inspection to examine compliance with the AML regulatory requirements when starting business relations with individual customers and carrying out transaction monitoring.
During the inspections, the FKTK identified breaches and deficiencies related to inappropriate internal control system, customer base risks and risk management.
The FKTK identified following irregularities in the activities of the bank:
- the bank had not taken sufficient measures to make sure that a true beneficiary indicated by the customer subject to due diligence, indeed was the true beneficiary;
- 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 ensure timely high-quality customer due diligence and documentation;
- 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 explanations by the Bank’s management did not provide the FKTK 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 FKTK 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 FKTK. However, the FKTK expects the Bank to ensure compliance with laws not only formally, but by nature in order to address the AML risks," the FKTK said in its statement.
FKTK concluded 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.
A 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 will pay the fine into the State budget within one month from the date of entry into force of the administrative act.