The nature of ADMISI’s business and 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 it had Politically Exposed Persons as clients.
The FCA raised concerns with ADMISI in 2014 about its AML systems, including the absence of a formal process to classify customers by risk. The FCA expected ADMISI to make improvements.
However, during a 2016 firm visit, the FCA found significant failings remained. In particular:
The firm’s AML customer risk assessment was basic and did not enable an assessment of a customer’s financial crime risk.
It did not conduct a firm-wide money laundering risk assessment.
There was little evidence of adequate on-going monitoring in the form of periodic customer reviews.
Policies were outdated and referred to old legislation.
After the 2016 visit, the ADMISI agreed to requirements, including one not to take on business from high-risk customers in order to lessen the threat of the firm being used to launder money or finance crime. 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.
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.'
The firm did not dispute the FCA’s findings and exercised its right, under the FCA’s partly contested case process, to ask the FCA’s Regulatory Decisions Committee to assess the appropriate level of penalty. The firm’s agreement to accept the FCA’s findings meant it qualified for a 30% settlement discount. Otherwise, the FCA would have imposed a financial penalty of £9,243,738.
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