Dubai Financial Services Authority (DFSA) has issued a significant fine on Mirabaud (Middle East) Limited, demonstrating its commitment to enforcing stringent anti-money laundering (AML) compliance measures.
Mirabaud was fined a hefty $3,022,500 (AED11,100,131) due to severe shortcomings in its AML systems and controls. This fine, for the period between June 2018 and October 2021, reflects the seriousness of the bank’s contraventions, pointing to an alarming inability to recognize and act upon red flags associated with potential money laundering activities.
The DFSA found that Mirabaud’s AML systems and controls were substantially inadequate, leading to the processing of transactions for nine interconnected client accounts that raised suspicions of potential money laundering activities. These transactions bore the hallmarks of the layering phase commonly seen in money laundering operations.
Mirabaud, despite having AML policies and procedures in place, demonstrated a systemic failure to consider vital information about the interconnected clients, including data obtained during customer due diligence. The bank processed numerous transactions inconsistent with the expected behavior of these accounts, contravening its own policies.
Further, Mirabaud failed to identify and report suspicious transactions, an essential step in combating money laundering. The bank also fell short in substantiating its customers’ experience in financial markets, a critical aspect of customer classification.
While no direct evidence of money laundering was found, the DFSA stressed the significance of the weaknesses in Mirabaud’s systems and controls. The regulatory body reduced the fine from an initial $3,900,000 (AED14,322,750) after the bank agreed to settle the matter.
The individuals implicated in the breaches, including the Relationship Manager handling the suspicious accounts and the Senior Executive Officer and Chief Compliance Officer at the time, have since left Mirabaud.
Ian Johnston, Chief Executive of the DFSA, underscored the critical importance of a robust AML control framework. “The level of penalty imposed on Mirabaud reflects the importance of AML compliance in maintaining confidence in the integrity of the DIFC,” said Johnston.
The case serves as a powerful reminder to all financial institutions of their crucial role in preventing money laundering and ensuring the integrity of the financial system. It underscores the need for robust and effective AML frameworks, comprehensive customer due diligence, and the importance of promptly identifying and reporting suspicious transactions.
This pivotal case sends a clear message to the financial sector about the dire consequences of AML non-compliance. At Verify 365, we remain committed to supporting financial institutions in maintaining robust AML compliance procedures, thus fostering trust and integrity in the financial system.