The Board of the Financial and Capital Market Commission (FCMC) on 29.11.2019 adopted a decision to impose a fine of 1 556 046euro on the JSC "Baltic International Bank" (hereinafter – the Bank) for deficiencies in the Bank’s internal control system. The Bank is also subject to a number of legal obligations, including the submission to the FCMC, within the specified timeframe, an action plan for addressing breaches and shortcomings identified and carrying out an independent review of internal control system.
In 2018 the FCMC carried out an on-site inspection of the Bank, as well as a targeted inspection, during which the FCMC identified that the Bank's internal control system does not fully comply to the regulatory requirements governing the prevention of money laundering and terrorism and proliferation financing (hereinafter – AML/CTPF). The Bank had not established an adequate internal control system to meet its risks in the field of prevention of money laundering and terrorism and proliferation financing, which would ensure effective compliance with the regulatory requirements such as:
– in several cases, the Bank had not taken sufficient measures to make certain that a beneficial owner indicated was the beneficial owner;
– in several cases, the Bank had not obtained documentation and had not taken necessary measures to make certain of the origin of financial means in its customer accounts and had not documented conclusions;
– the Bank had not ensured appropriate and high-quality enhanced customer due diligence and the documentation of results thereof;
– the Bank had not duly decided on termination of business relationship with customers;
– the Bank had not paid sufficient and special attention to untypical large, complex, inter-related transactions with no apparent economic purpose or clear legal purpose, including had not timely obtained documents supporting the economic activities of customers.
In view of above, it is concluded that the Bank has not ensured the effective functioning of the internal control system in the field of the prevention of money laundering and terrorism and proliferation financing in a way that its activities comply with the AML/CTPF regulatory requirements. At the same time, the FCMC takes into account the progress made by the Bank in addressing shortcomings identified by the FCMC.
In accordance with the FCMC’s decision, the Bank has to submit to the FCMC a plan of the measures to carry out the legal obligations imposed and to address the irregularities and shortcomings identified and to take the measures provided for in the plan within the specified time limits in order to prevent further irregularities of a similar nature in the internal control system in the field of money laundering and terrorism and proliferation financing risks management. Besides, an independent assessment of the appropriateness and effectiveness of the Bank’s internal control system should be carried out involving a sworn auditor or a commercial company of sworn auditors.
The amount of the fine imposed on the Bank shall be 90% of the maximum statutory amount, 10% of the Bank’s total annual turnover. The fine specified for the Bank shall be paid into the State budget within one month from the date of entry into force of this administrative act. In 2016, the FCMC had already imposed sanctions on the Bank for infringements of the AML/CTPF regulatory requirements.