RBS is set to pay a record £1.5bn to settle charges it failed to properly track money laundering transactions at its branches and the bank’s financial reporting unit.
The financial regulator, the Financial Conduct Authority, said the settlement was “the largest ever settlement” for a bank that it has investigated.
It will be the largest ever payment from a bank to resolve a regulatory matter for a financial institution.RBS said the amount, which is in addition to the $1bn that was paid to customers of the bank, included the cost of the investigation, legal fees and costs of reviewing records.
It said it would be “making significant changes” to the way it processes customer transactions to improve its compliance.
The FSA said it had concluded that RBS “acted inadequately and, with significant cost to RBS, in breach of the law”.
The bank has already paid $2bn to US and British customers.
“We have a responsibility to our customers and will act to address this issue,” said David Smith, chief executive of RBS.RBC said it was disappointed with the settlement.”RBS has taken a number of significant steps in recent years to strengthen the way the bank processes its customers’ financial transactions, and we continue to work hard to ensure that customers are fully protected,” said a spokesman.RBA governor Mark Carney said the FSA investigation was a “complex and sensitive” issue and he was “not surprised” by the RBS settlement.RITC chief executive Chris Hutton said the case had demonstrated the need for an effective regulator to tackle money laundering.
“This settlement is a great step forward, but there is much more we need to do to ensure the integrity of our financial system and to ensure a safe and secure banking environment for the UK’s financial system,” he said.RBI said it believed the settlement would have been much higher had it been subject to an investigation into the conduct of RBC’s commercial banking unit.
It was unclear if the UK regulator had any further discussions with RBS about the settlement, which was announced late on Friday.
It is not clear if the settlement has affected the bank or RBS’s ability to operate in the UK.RSC chairman Alan Johnson said he was confident the bank would be able to continue to operate as a bank.
“We are confident that RBC will continue to function in the United Kingdom and that the bank will be able and willing to continue doing business there,” he told BBC Radio 4’s Today programme.
“The fact that it is a settlement shows that there is a process of change taking place in the bank that will benefit its customers and that we are taking these steps.”RBS did not respond to requests for comment.