Challenger bank Gatehouse fined for ‘poor’ AML checks

London-based challenger bank Gatehouse has been fined £1.5m by the UK financial regulator for failing to carry out anti-money laundering due diligence.

Founded in 2008, Gatehouse is a Shariah-compliant challenger bank. This means it follows economic and banking rules that adhere to Islamic principles, such as not paying interest.

The Financial Conduct Authority (FCA) believes that between June 2014 and July 2017, Gatehouse failed to carry out appropriate checks on customers based in regions which had been flagged as high risk for money laundering.

The FCA also found that Gatehouse failed to undertake the proper checks on clients classified as Politically Exposed Persons (PEPs), meaning politically significant figures who must be scrutinized for bribery and money laundering.

The regulator recounted one case in which Gatehouse Bank set up an account for a Kuwait-based company without requiring the company to collect information about the source of customers’ finances.

The watchdog said that over a two-year period, Gatehouse accepted $62m (£55m) into the account without carrying out proper financial crime checks.

“Gatehouse Bank’s failures put it at risk of being used as part of a money laundering process,” said Mark Steward, executive director of enforcement and market oversight at the FCA.

“While not intentional, there can be no excuse for failures as serious as this. The FCA will continue to hold firms accountable for poor anti-money laundering systems and controls.

The total amount of the fine handed to the bank is a 30% reduction on the original penalty of £2.2m. The firm qualified for this reduction because it agreed to settle the case early in the investigation.

This was said by a spokesperson of the bank UKTN: “We accept the outcome of the FCA and can now draw a line under this old problem dating back to 2014 to 2017.”

The spokesman said the bank was fully compliant with anti-money laundering requirements from that period.

“The current executive team joined Gatehouse in 2017 in part to remedy this problem. Over the past five years, the bank has invested significantly in financial crime control capabilities to ensure we operate to the highest industry standards.”