Middle Eastern bank fined £475k over money laundering risk

Wednesday 05 February 2020

The Jersey branch of a Middle Eastern bank has been fined £475,000 for failing to intervene appropriately when two customers made a series of 'suspicious' withdrawals totalling nearly £1million.

The Royal Court case marks the first time a company has been convicted and sentenced for failing to comply with Jersey’s legislation on money laundering since 2005.

Abu Dhabi Commercial Bank Jersey (ADCB Jersey) branch were this afternoon (Wednesday 5 February) brought before Jersey’s highest court to be sentenced for a single charge of failing to fully carry out its anti-money laundering duties in relation to the use of two Jersey bank accounts in the United Arab Emirates.

There is no allegation that the activity on either account actually amounted to money-laundering, but the branch was prosecuted for failing to adequately monitor the account activity and failing to sufficiently assess the risk of money laundering or terrorism financing.

Crown Advocate William Redgrave, prosecuting, explained that on both of the Jersey bank accounts, “large amounts of cash, in the tens of thousands of US dollars each time, were withdrawn over a period of years… without sufficient scrutiny of what the money was being used for."

In total, $1.2million (just under £1million) was withdrawn in transactions made over the counter at Abu Dhabi Commercial Bank’s UAE branches.

The Court was told that, “...in each case, the pattern of withdrawals changed over the period,” and that the bank “...failed to respond appropriately by seeking evidence as to the legitimacy of these withdrawals, and it permitted the situation to persist for years."

ADCB Jersey never had any contact with the account holders - referred to in court only as 'Mr A' and 'Mr B' - nor did its staff carry out any of the transactions.

However, as the two customers in the Middle East held Jersey bank accounts, it was the branch’s responsibility to follow up on any indicators of potential money-laundering. 

Crown Advocate Redgrave told the Court that Mr A, an Iraqi national and employee of a multinational oil and gas company, opened an account with ADCB Jersey in July 2013. Activity on the account began to change and then a series of cash withdrawals of large amounts were made over a number of years.

In total, Mr A took out a total of $926,000 in cash between 2013 and 2018.

Mr B, a Syrian national, opened two accounts with ADCB Jersey in 2014. He also started withdrawing large amounts of cash in a way that was uncharacteristic, taking out a total of $330,000 in cash during 2018.

The Court heard that the bank did take some steps to find out more about the transactions, but their response was not deemed sufficient to meet their Anti-Money Laundering duties.

The Crown Advocate invited the Court to impose a fine of £600,000.

Representing the bank, Advocate William Grace argued that this recommendation was “too high”, adding that it risked setting a “bad precedent” for the Court when it comes to sentencing future cases of this nature.

He also said that the Crown’s conclusion didn’t take into account all the points in favour of his client, emphasising that the bank did take steps to enquire about the account activity and to investigate the unusual activity, but that “it could have done more".

Advocate Grace also highlighted that the branch had been cooperative with the investigation throughout.

The Court was also told that ADCB are leaving Jersey soon, but that this was "an unrelated event" that is due to a merger happening with the main bank in the UAE.

The defence lawyer made the case that, given his client’s ‘guilty’ plea, a more appropriate fine would be £250,000.

Bailiff Tim Le Cocq, who was sitting with Jurats Steve Austin-Vautier and Jerry Ramsden, said that the full reasons for their decision would be given in a written judgment as it is “an important matter” and “one of the few cases in this area”. 

The Court then imposed a fine of £475,000 and ordered the ADCB Jersey pay a contribution to the prosecution’s costs of £25,000.

Following the decision, Jersey’s Solicitor General and soon-to-be Attorney General Mark Temple commented: “I welcome the sentence handed down by the Court which shows that Jersey, in its position as a global finance centre, is committed to combatting financial crime and ensuring that financial service providers are held to account when offences of this kind are committed. 

“The sentencing today represents the culmination of a long-running investigation into the activity of Abu Dhabi Commercial Bank PJSC Jersey Branch by the Law Officers’ Department’s Economic Crime and Confiscation Unit.”