Between 1 April 2015 and 30 November 2017, Al Rayan allowed money to pass through the bank, and be used within the UK without carrying out appropriate checks. The firm failed to adequately check its customers’ Source of Wealth and Source of Funds when it was required to make sure the money was not connected to financial crime.

The failings were made worse by the lack of proper training provided to staff about how to handle large deposits, which further heightened the risk of money laundering and financial crime.

Al Rayan was aware of these weaknesses and failed to implement effective changes to fix them, despite the FCA raising concerns about the inadequacies of their systems.

After the FCA visited Al Rayan in 2017, the bank voluntarily agreed not to take on further high-risk customers. This restriction has now been lifted, following improvements to the bank’s systems and controls, but the bank remains subject to some limited restrictions while further improvements are made.

Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said:

“Al Rayan failed to manage the risk that it might be used to facilitate money-laundering.

“These failings create the conditions in which financial crime is facilitated and can take root within a firm. While the risk was caught in time, the failings here were egregious.

“The FCA will continue to raise the stakes for firms that do not take their financial crime responsibilities seriously, especially in preventing money laundering risks which harms confidence and integrity in our market and in preventing financial crime, which is a key component in the FCA’s three-year strategy.”

Al Rayan did not dispute the FCA’s findings and agreed to settle, which meant it qualified for a 30% discount. The FCA would have imposed a financial penalty of £5,748,000 if a settlement wasn’t reached.

Giles Cunningham, Chief Executive Officer at Al Rayan Bank, said:

“The FCA identified historic weaknesses in the Bank’s financial crime systems and controls that date back to a period between 2015 and 2017.

“The FCA found no evidence of any money laundering or other criminal activity by the Bank nor its customers and none of the Bank’s existing management were in a senior management function at the time.

“The Bank cooperated fully throughout, and all identified weaknesses have been fully resolved with the support and assistance of external, independent subject matter experts.

“The financial penalty will have no material impact. The Bank remains well capitalised and will report very strong financial results for 2022.

“Maintaining strong defences against the evolving threats of financial crime is an essential part of our business plan and is being led by the new Board and Executive team.”