Related News

Trade finance results: Europe steady, Middle East and Brazil grow

Standard Chartered first major bank to adopt ICC’s sustainable trade finance principles

GTR Leaders in Trade: The shortlist

FIS expands into supply chain finance with Demica acquisition

Finastra launches trade finance assistant powered by OpenAI

Ulster Bank Ireland has been hit with a €3.325mn fine for breaching Ireland’s money laundering and terrorist financing laws.

The fine is the biggest handed out by Ireland’s Central Bank and is connected to breaches over a six-year period, including “areas of non-compliance in respect of trade finance procedure manuals”.

The central bank outlines “significant failings” in Ulster Bank’s efforts in anti-money laundering (AML) and counter-terrorist financing, including governance of AML outsourcing, risk management around systems implementation and customer due diligence.

A central bank statement reads: “Ulster Bank Ireland failed to have adequate policies and procedures specific to trade finance and in particular, until February 2015 it failed to include guidance in the procedure manuals for its trade finance business on the identification of potentially suspicious activity in that business ie trade finance red flags.”

The fine grants Ulster Bank the dubious honour of being the most fined institution in Ireland. In the past 10 years, it has been handed fines totalling €10.8mn, more than twice as much as the second most fined outfit, the Irish Nationwide Building Society (€5.05mn).

The central bank’s director of enforcement Derville Rowland says that the major concern with Ulster Bank is the persistent failures to address these issues over a sustained period of time.

“Ulster Bank Ireland provides a gateway to the financial system for more than 1million customers through its extensive network of branches, online and telephone banking. Therefore, it is imperative that it vigorously applies the highest levels of anti-money laundering compliance in order to protect, not only itself, but its customers and the wider financial system,” she says.

Rowland urges financial institutions to place the same controls on outsourced agencies as they would on their own systems and staff.

This issue has pervaded the trade finance sector around the world, with many banks severing their correspondent banking relationships because the relevant due diligence is becoming increasingly time and cost consuming.

Banks and companies have been seeking ways to continue their usual operations while increasing risk management.

Standard Chartered, for example, has embarked on a large trade distribution programme, leveraging guarantees from development banks to finance clients in perceived riskier jurisdictions.

A survey of 1,700 trade professionals released in October by Thomson Reuters found that 53% of respondents thought technology would be the key element in improving their trade compliance programmes.

The survey also found that the majority of trade and supply chain departments lack the systems and processes needed to reduce complexity and automate processes. The end result is often moving away from non-core geographies or sectors.