AIB fined €2.3m for breaking money-laundering rules

Bad timing for the bank as it gears up to refloat this summer...

AIB has been fined €2.275 million for breaches of money laundering and anti-terrorist financing regulations.

The Central Bank imposed the fine for six breaches of the 2010 Criminal Justice Act over a three-year period. It is the biggest fine levvied against AIB by the Central Bank and follows a €3.325m fine issued to Ulster Bank last year for similar breaches.

AIB admitted that it failed to report 211 suspicious transactions promptly to Gardaí and the Revenue Commissioners.

The issues related to its former EBS subsidiary rather than the bank overall and occurred up to July 2014.

According to The Irish Times, AIB’s anti-money laundering unit took over 18 months to fully address the backlog, which stood at over 4,200 alerts outstanding for 30-plus days at one point.

Sunday Times business columnist Nick Webb believes it is bad news for the bank:

"This is a really big deal and it's a very, very public fine. It comes at a spectacularly bad time for AIB because as we know it's limbering [up] to float on the stock markets. The State is going to sell up to 25% of the company; remember we bailed out the bank so we own it."

Newstalk business editor Vincent Wall said:

"The really serious element of this is not just that there was a backlog in their processes in dealing with suspicious items but they failed to report in time then on a small number that really did look suspicious to Gardaí."

AIB chief executive Bernard Byrne

Speaking to Wall on Breakfast Business, Davy's Aidan Donnelly said recent increased efforts to tackle illegal activity was posing problems for financial institutions:

"There's obviously been a lot of changes in the regulation over the last couple of years and a lot of the banks, not just here but across Europe, are just struggling to get old legacy systems up to speed.

"There's been a substantial ramping up of the money-laundering and anti-terrorism funding regulations over the last couple of years and it impacts every part of financial services now. So there's multiple steps in this and you can be found wanting at several different bits."

Derville Rowland, the Central Bank’s director of enforcement, said:

“It was particularly concerning that sufficient resources were not applied promptly to investigate a substantial backlog of alerts of potentially suspicious activity.”

AIB stated that a “comprehensive programme” had been put in place to resolve all of the issues and that it had “fully co-operated” with the Central Bank.