FIAU fines BNF Bank for anti-money laundering shortcomings

The Financial Intelligence Analysis Unit (FIAU) has fined BNF Bank €190,000 for administrative failings on its anti-money laundering requirements.

The FIAU held an inspection in 2020 which identified the failings, which included the bank breaching its own risk assessment policies, as well as “genuine mistakes” in record keeping. The bank may choose to appeal the €189,274 fine in court. The FIAU pinpointed an instance in 2014 where the bank allowed a customer to withdraw a total of €4 million in one year, without the bank thoroughly questioning the customer.

At onboarding stage, the FIAU also found that the bank took on customers without carrying out its own customer risk assessment, breaching its own policies and legal obligations.

Inspectors noted that the bank’s system of assigning a risk rating to customers was “inadequate” as it only took a few risk factors into consideration. The system has been revised since then, the FIAU report noted.

The bank also failed to carry out business risk assessments on time, and only drafted such a document a year after the legal requirement to carry out such assessments came into place. The FIAU reprimanded the bank on that failing.

The FIAU also noted the inefficiency of having bank employees manually flag suspicious transactions each week. The system yielded only 16 reports in 2019, which the FIAU considered to be too low. The bank has since shifted to an automated transaction monitoring system, having also hired a data analyst to extract such data and provided specialised training to staff. This was acknowledged by the FIAU, who commended the bank for the pro-active approach on the changes.

The FIAU instructed BNF to revamp its customer risk assessment methodology, to provide a detailed timeline about its work to update expired customer files, and to explain its new transaction monitoring system in detail.

BNF statement

BNF Bank, in a statement, noted the FIAU report, "the findings of which mostly happened in or around 2015. On acquisition by the current majority shareholder, the Bank embarked on a thorough and pro-active review of all its processes and controls, specifically around its AML and CFT obligations. This has been viewed very positively by the FIAU in its publication issued yesterday. The Bank is committed to continue to work with all regulators in Malta in striving to further enhance the high standards by which it holds itself to."