RBS private bank Coutts fined £5m over money laundering scandal

Coutts, which is the bank used by the queen, has been ordered to pay the penalty by Swiss regulators after it was found to have “seriously breached” money laundering regulations and “unlawfully generated profits”.

The Swiss Financial Market Supervisory Authority (Finma) noted that it decided not to impose wider-reaching measures because Royal Bank is at “an advanced stage” of off-loading Coutts’ international interests to Geneva-based private bank Union Bancaire Privée.

Finma said it had uncovered “serious deficiencies” in the way Coutts dealt with transactions from a Malaysian businessman with links to the Kuala Lumpur-based sovereign wealth fund, which has consistently denied wrongdoing but remains at the centre of several international investigations into alleged corruption and money laundering by public officials.

The Swiss watchdog said that between 2009 and 2013 “numerous high-risk transactions” involving $2.4 billion of assets related to 1MDB were processed through the businessman’s Swiss bank account.

As Coutts did not report any suspicions to the Swiss authorities until 2015, however, Finma said it was “in serious breach of its duty to ensure proper business conduct”.

The bank also ignored internal warnings from some of its employees, Finma said. In December, the Monetary Authority of Singapore imposed a 2.4 million Singapore dollar fine on Coutts for anti-money laundering breaches at its branch there.

“We regret any historic failings in our processes,” RBS said in a statement. “Coutts & Co has progressively and substantially strengthened its AML policies and controls. We are in the process of winding-down this Swiss-incorporated business, following the sale of the majority of the assets last year.”

Finma is still considering bringing proceedings against the individual bank employees responsible for the transactions and has also referred Royal Bank to UK watchdog the Financial Conduct Authority (FCA).

The FCA has chosen not to comment on the matter.