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Private bank fined for lax anti-fraud controls

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16th May 2007
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A private bank has been fined £350,000 by the Financial Services Authority (FSA) after weaknesses in its systems and controls allowed a senior employee to transfer £1.4m out of clients' accounts without permission. Matt Henkes reports.

In the first case where a private bank has been fined for anti-fraud weaknesses, the FSA found that BNP Paribas Private Bank (BNPP) did not have an effective review process for large transactions from clients' accounts.
The 13 fraudulent transfers were made between February 2002 and March 2005 using forged signatures and falsified change of address forms, it said.

"BNPP Private Bank's failures exposed clients' accounts to the risk of fraud," said Margaret Cole, FSA director of enforcement.

"This is unacceptable particularly with the overall increase in awareness around fraud and client money risks. Senior management must make sure their firms have robust systems and controls to reduce the risk of them being used to commit financial crime."

The bank was aware that its procedures were in need of improvement following an FSA visit in 2002, though failed to carry out the required actions "on a timely basis", it said.

"This is a warning to other firms that we are raising our game in this area and expect them to follow suit," added Cole. "We will not hesitate to take action against any firm found wanting."

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