According to a statement made by the regulator today (14th October), between June 2014 and July 2017, the Sharia-compliant bank failed to conduct sufficient checks on its customers based in countries with a higher risk of money laundering and terrorist financing.

It also didn’t undertake correct checks when some of the customers were classed as Politically Exposed Persons (PEPs).

In one instance, Gatehouse Bank set up an account for a company based in Kuwait to aggregate customer funds, and did not require the firm to collect information about customers’ source of funds or wealth — which was required under the bank’s anti-money laundering policies. 

As a result, over a two-year period, Gatehouse Bank accepted US$62m (approximately £55m) into the account without properly vetting the funds for financial crime risks. 

The fine of £1.58m follows the bank’s agreement to settle at an early stage of the investigation — thus qualifying for a 30% reduction on the original penalty of £2.26m.

Gatehouse has subsequently taken steps to improve its financial crime systems and controls.

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Mark Steward, executive director of enforcement and market oversight at the FCA, said: “Gatehouse Bank’s failures exposed itself to the risk that it might be used as part of a laundering process for illegal funds — while not deliberate, there can be no excuse for failures as serious as this. 

“The FCA will continue to hold firms to account for poor anti-money laundering systems and controls.”

A spokesperson for Gatehouse Bank said: “We accept the FCA outcome and can now draw a line under this old issue dating from 2014 to 2017. 

“The team has fully cooperated with the regulator and has been engaged throughout the process — a thorough review during this period identified no cases of money laundering.

“The current executive team joined Gatehouse in 2017 in part to remediate this issue, but also to develop a new retail strategy for the bank supporting homebuyers, landlords and savers. 

“Over the last five years, the bank has invested significantly in financial crime control capabilities to ensure we operate to the highest industry standards, and the new strategy has been a great success.

“Our strategic plans to increase support for homebuyers, landlords and savers remain unchanged.”