Dubai: The Dubai Financial Services Authority (DFSA) took action against bank Mirabaud (Middle East) Limited ('Mirabaud') for its lack of adequate anti-money laundering (AML) systems and controls over a period spanning from June 2018 to October 2021. In response to these violations, the DFSA has imposed a fine of $3.02 million (AED 11 million) on the bank.
The fine is not limited to just punitive measures but also includes disgorgement of $975,000 (Dh3.5 million). This amount represents the economic benefit that Mirabaud derived from its contraventions in the form of fees and commissions. Mirabaud agreed to settle the matter, reducing the fine from $3.9 million (Dh14.3 million).
The DFSA's investigation focused on the handling of transactions for a group of nine interconnected client accounts managed by the same Relationship Manager. These transactions exhibited several characteristics indicating potential money laundering, such as closely connected individuals opening accounts, funds coming from third-party accounts, complex and inconsistent transactions, and significant transfers to entities with opaque foreign ownership structures, as stated in the Authority's statement.
Although the DFSA didn't discover direct evidence of money laundering, it found Mirabaud's weak systems and controls failed to identify and address crucial indicators of potential money laundering. “Although Mirabaud put in place AML policies and procedures, they were ineffective. When processing transactions for this group of interconnected customers, Mirabaud failed to consider information it held about them, including that which had been obtained as part of the bank’s customer due diligence,” DFSA said in a statement. Consequently, Mirabaud processed a substantial volume of suspicious transactions for these interconnected customers over nearly three and a half years, breaching its own policies.
Mirabaud's failures extended to recognizing and reporting suspicious transactions, even after intervention by its compliance department due to inadequate responses.
The DFSA also found that Mirabaud failed to provide adequate evidence of customers' financial market experience, required for their classification as Professional Clients. The Authority identified instances where claimed financial market experience was solely based on an undocumented assessment by the relationship manager, raising doubts about its credibility.
Due to the severity of these failings, the relationship manager responsible for these customers and individuals holding the roles of senior executive officer and chief compliance officer during the relevant time period have all left Mirabaud.
“By failing to ensure that its AML systems and controls were effective, Mirabaud did not recognise clear indicators of potential money laundering or take the appropriate action when it had concerns about customers’ activity,” said Ian Johnston, CEO of the DFSA. “The level of penalty imposed on Mirabaud reflects the importance of AML compliance in maintaining confidence in the integrity of the DIFC.”