Allied Irish Banks Plc, preparing for what could be one of the biggest share sales in London this year, was fined more than 2 million euros ($2.2 million) by the Irish central bank over compliance failures in relation to anti-money laundering and terrorist financing laws.
The central bank fined AIB about 2.3 million euros and reprimanded it for six breaches of the law, which the lender has admitted to, the regulator said in an emailed statement Tuesday. AIB said separately that the settlement related to issues occurring between July 2010 and July 2014.
During that period, AIB failed to “report suspicious transactions without delay” to police and tax authorities and didn’t conduct due diligence on customers whose accounts predated the first Irish anti-money laundering laws in 1995, the central bank said. It also found breaches regarding AIB’s policies and procedures concerning anti-money laundering and anti-terror financing in “a number of areas,” including its trade finance business.
The fine and reprimand come weeks ahead of a possible sale of a quarter of the bank on the London Stock Exchange. The Irish government, which controls 99.9 percent of AIB as a result of a bailout during the financial crisis, may sell part of its holding in the bank between May and July and raise as much as 3 billion euros.
“Coming just weeks before the planned IPO, this is an embarrassing development for the bank and indeed the government,” said Michael McGrath, finance spokesman for Fianna Fail, the nation’s biggest opposition political party. “The identification of serious breaches by the regulator of vital regulations sends the wrong message to potential investors in the bank at this crucial time.”
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“A comprehensive risk mitigation program was put in place to resolve all of the issues,” AIB said. The bank “fully co-operated with the central bank at all stages of this investigation, which has now concluded,” it added.
AIB is the second Irish bank to be penalized for anti-money laundering and terrorist financing failures in less than six months. The central bank fined Royal Bank of Scotland Group Plc’s Ulster Bank 3.3 million euros in November.
“It was particularly concerning that sufficient resources were not applied promptly to investigate a substantial backlog of alerts of potentially suspicious activity,” central bank director of enforcement Derville Rowland said of the AIB case.
AIB, led by Chief Executive Officer Bernard Byrne since 2015, holds its annual general meeting on Thursday. The bank announced its first dividend since the financial crisis last month.