FCA Levies £6.47 Million Fine on ADM Investor Services International Limited for Financial Crime Control Failings

The Financial Conduct Authority (FCA) has imposed a fine of £6,470,600 on ADM Investor Services International Limited (ADMISI) for serious financial crime control deficiencies. The FCA raised concerns regarding ADMISI's anti-money laundering (AML) systems in 2014, particularly noting the absence of a formal customer risk classification process.

Despite prior warnings and discussions with the FCA, during a firm visit in 2016, ADMISI was found to have significant AML failings, including inadequate customer risk assessments and a lack of firm-wide money laundering risk evaluation. Additionally, there was insufficient evidence of periodic customer reviews, and the firm's policies were outdated, referencing obsolete legislation.

In response to the FCA's findings in 2016, ADMISI agreed to certain requirements, including not taking on business from high-risk customers to mitigate the risk of money laundering or financial crime. By October 2016, ADMISI had introduced AML policies and procedures to address the identified issues, leading to the removal of these requirements in January 2018 after further corrective actions.

Therese Chambers, Joint Executive Director of Enforcement and Market Oversight at the FCA, emphasized the necessity for financial firms to have effective AML checks in place. She stated, "ADM Investor Services’ failures put it at risk of being used to facilitate financial crime. These failings continued even after the firm had received clear warnings on the need to improve its systems."

ADMISI did not contest the FCA's findings and invoked its right to have the FCA's Regulatory Decisions Committee assess the appropriate penalty. The firm's willingness to accept the FCA's conclusions made it eligible for a 30% settlement discount, reducing the penalty from £9,243,738.

The fine levied on ADMISI underscores the FCA's commitment to ensuring that financial institutions maintain robust AML systems and controls. Inadequate AML practices not only expose firms to financial crime risks but also create an unfair competitive advantage, as non-compliant firms save on compliance costs and attract customers seeking to evade due diligence checks.

ADMISI operates under the regulatory oversight of the FCA, and its failings constituted a breach of Principle 3 of the FCA's Principles for Businesses, which requires firms to take reasonable steps to organize their affairs responsibly and effectively, with adequate risk management systems.