The Dubai Financial Services Authority (DFSA) has issued a significant fine of $3,022,500 (AED11,100,131) on Mirabaud (Middle East) Limited, also known as Mirabaud, due to the bank’s inadequate anti-money laundering (AML) systems and controls.
The fine was imposed for the period between June 2018 and October 2021.
As part of the penalty, Mirabaud has also been ordered to disgorge $975,000 (AED3,580,687), representing the economic benefit the bank gained from its contraventions in the form of fees and commissions.
However, the fine was reduced from an initial amount of $3,900,000 (AED14,322,750) as the bank agreed to settle the matter with the DFSA.
The regulatory authority discovered that Mirabaud’s AML systems and controls were severely lacking, leading to the processing of transactions for a group of nine interconnected client accounts managed by the same Relationship Manager, which raised suspicions of potential money laundering activities.
These activities exhibited characteristics typically seen in the layering phase of money laundering operations.
While the DFSA did not explicitly find evidence of money laundering in these transactions, it did highlight significant weaknesses in Mirabaud’s systems and controls, indicating the bank should have recognised and acted upon the red flags.
Mirabaud had implemented AML policies and procedures, but they proved ineffective.
The bank failed to consider vital information about the interconnected customers, including data obtained during customer due diligence.
Consequently, Mirabaud processed numerous transactions for these customers over almost three and a half years, despite the activities being inconsistent with the accounts’ expected behavior and prohibited under the bank’s own policies.
Additionally, the bank failed to identify and report suspicious transactions, as well as lacking suitable evidence of customers’ experience in financial markets, which is essential for customer classification.
The relationship manager responsible for these clients, along with the senior executive officer and chief compliance officer at the time of the failings, have since left the bank.
DFSA stresses AML compliance importance
Ian Johnston, Chief Executive of the DFSA, stressed on the importance of a robust AML control framework, said: “The level of penalty imposed on Mirabaud reflects the importance of AML compliance in maintaining confidence in the integrity of the DIFC.”
The DFSA’s Decision Notices detailing the case can be accessed in the Regulatory Actions section of their website.
The case serves as a reminder of the critical role financial institutions play in preventing money laundering and ensuring the integrity of the financial system.
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