Bank Fined £250,000 by FSA

Standard Bank Isle of Man has been fined just under £250,000 by the Financial Services Authority after it allowed a transfer of money in breach of a court order. 

The breach involved a transfer of money which only came to light several months after the event. 

In a news release, the FSA said that the breach, which happened in September 2020, was discovered by Standard Bank in April 2021, after which it ‘immediately’ notified the authority. 

The Breach

The Court Order restrained, inter alia [among other things], the disposal, diminution, removal from the jurisdiction of, and dealing with, funds in respect of specified bank accounts in the name of a client of Standard. 

The FSA said: ‘The breach of the Court Order involved two stages: enabling the transfer of funds between the Restrained Accounts within Standard; and processing an instruction from the client for further transfer of funds out of the jurisdiction of the Isle of Man, albeit to another Standard Bank group entity… In June 2021 Standard submitted a full and detailed Incident Report to the Authority, following its own investigation. Standard continued its own root cause analysis, sharing its findings with the Authority, up to and including November 2021.’

Preventative controls that were applied at the time of the breach of the Court Order were such that they differed between transactions involving banking entities not related to Standard and those banking entities related to Standard. The breach of the Court Order arose because of some weaknesses in the preventative controls pertaining to intragroup transactions.

Outcome

Since the conclusion of both its own investigation and the FSA’s, Standard has confirmed to the authority that operational controls have been enhanced to prevent any similar breach occurring.

The FSA fined Standard £353,320 discounted by 30% to £247,324 which reflected its cooperation with the FSA and agreeing the settlement at an early stage. 

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