The Financial Conduct Authority has fined UK broker ADM Investor Services International £6,470,600 for inadequate anti-money laundering systems and controls.

The watchdog said the nature of the broker’s business and its client base presented potentially high levels of money laundering risk because of its business model, the geographical location of its customers, the proportion of its business involving high-risk clients, and because some of those clients were considered Politically Exposed Persons.

Having raised concerns with the broker in 2014 about its AML systems, and the absence of a formal process to classify customers by risk, the FCA found many of those issues were still present during a visit two years later. Amongst those issues were that the firm’s AML customer risk assessment was basic and did not enable an assessment of a customer’s financial crime risk. The company was also not able to evidence that it had conducted a firm-wide money laundering risk assessment. The watchdog also found little evidence of adequate ongoing monitoring in the form of periodic customer reviews. Further, the firm’s policies were found to be outdated, referring to old legislation.

Therese Chambers, joint executive director of enforcement and market oversight, said: “All financial firms need to have effective anti-money laundering checks in place. ADM Investor Services’ failures put it at risk of being used to facilitate financial crime. These failings continued even after the firm had received clear warnings on the need to improve its systems.”

By the end of October 2016, ADMISI had introduced AML policies and procedures to address the concerns identified. After further remedial action the requirements were lifted in January 2018.

Its agreement to accept the FCA’s findings meant it qualified for a 30% settlement discount to what would otherwise have been a financial penalty of £9,243,738.

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