Stockbroker fined for failures on money laundering and terrorism

Dublin stockbroker Campbell O'Connor has been fined €280,000 by the Central Bank for compliance failures in its responsibility to combat money laundering and the financing of terrorism.

The company previously announced it is closing its doors in June, citing “the ever increasing complexity of doing business in a changing regulatory landscape which does not favour smaller firms”.

The Central Bank said on Friday the stockbroker was guilty of five breaches of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010. The firm has admitted the breaches.

The regulator determined that the appropriate fine was €400,000, which was reduced by 30 per cent to €280,000 in accordance with the settlement discount scheme.

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The Central Bank’s investigation into Campbell O’Connor began following a themed supervisory inspection which was part of its ongoing engagement with the investment firm sector.

The inspection identified failings in its anti-money laundering and countering the financing of terrorism framework. The breaches occurred between July 2010 and November 2016.

The breaches related to a “failure to conduct appropriate money laundering/terrorist financing risk assessment”, as well as a “failure to adopt adequate policies and procedures for preventing and detecting” such activity.

Furthermore, it was found to have failed to monitor and scrutinise customer transactions; failed to provide training to staff on identifying suspicious transactions; and failed to ensure necessary arrangements were in place with third parties it relied on to conduct customer due diligence measures.

The Central Bank said Campbell O’Connor took the necessary steps to rectify the failings that gave rise to the breaches by August last year, and that the investigation is now closed.

Central Bank director of enforcement and anti-money laundering Seána Cunningham said this was the first enforcement action taken against a stockbroker for breaches of the Act, and said monitoring compliance will remain “a key priority” for the regulator.

“The Central Bank’s investigation found that for a period of over six years, the firm’s framework was not fit for purpose,” she said.

“The investigation found that the firm failed to assess key risks facing its business. For example, the firm failed to undertake any assessment of terrorist financing risk at all.

“The firm placed too much reliance on personal knowledge of its customers in assessing risk and failed to adopt the necessary policies and procedures to enable it to appropriately identify, assess, and manage these risks.”

Ms Cunningham said the role of financial service providers in detecting and reporting in this area is “vital in safeguarding the financial services sector from criminal and terrorist activity”.

“The firm’s failure to comply with its obligations over a prolonged period is of significant concern to the Central Bank,” she said. “This action highlights the seriousness with which the Central Bank views failings of this nature by regulated firms.”