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Regulators hit RBS with stern warning on anti-money laundering systems

Federal Reserve says bank needs strict US monitoring systems plan

The Royal Bank of Scotland has been issued with a tough warning, by regulators at the US Federal Reserve, on its anti-money laundering IT systems.

The warning comes a year after the UK Financial Services Authority levied a £5.6 million fine on RBS over similar problems. The bank was found to have weaknesses in its screening software.

Yesterday, the Federal Reserve ordered RBS to improve risk management processes at its US operations, as well as to deliver a plan outlining how it will enhance "corporate governance, management, risk management and operations".

"At a minimum", it said, the plan needed to include "a timetable to implement improvements to suspicious activity monitoring systems and processes" and management information systems, as well as details on the frequency of transaction monitoring and an assurance that any outsourced monitoring meets regulatory requirements.

There also needed to be strict monitoring criteria and full customer due diligence, the Federal Reserve noted.

RBS, which is 83 percent owned by British government after its near-collapse during the banking crisis, has 60 days to submit the written plan.

The bank today insisted it was tackling the issue. "We set and expect higher standards than those that resulted in this order," said chief executive Stephen Hester.

"RBS is well-advanced in addressing the deficiencies noted by the US banking authorities and in continuing to upgrade governance and compliance systems throughout the group."


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