The U.K.’s Financial Conduct Authority may step up its scrutiny of the London branches of Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp., Caixin reported on its website, citing unidentified people.
The FCA’s enhanced checks on the two banks come after a money-laundering probe into ICBC in Madrid, according to the report. ICBC and CCB declined to comment when contacted by Bloomberg. It wasn’t clear from the report what measures the FCA had already put in place.
Based on rules set by the Financial Action Task Force, the FCA thinks the banks aren’t doing enough due diligence to check on the nature of clients’ business, transaction purposes and sources of funding, Caixin reported. The regulator also thinks the banks aren’t stepping up due diligence on state-owned enterprises and politically connected public figures, the magazine said.
The FCA’s feedback on ICBC’s London branches has been positive and exceeded the bank’s expectation, Caixin cited an unidentified person close to ICBC as saying, without elaborating. Calls to the FCA made outside U.K. business hours went unanswered, while the British Embassy in Beijing didn’t immediately respond to a call seeking comment.
Spanish authorities are tracking about 80 million euros ($90 million) of funds allegedly laundered through the offices of ICBC in the country, a person with direct knowledge of the investigation said earlier this month. The inquiry is examining deposits made during 2011 at ICBC’s unit in Madrid and also those made in 2012 via a correspondent agreement with a Spanish lender, said the person.
Police raided ICBC’s offices in Madrid on Feb. 17 in connection with an investigation into money laundering, detaining three suspects in the process. The Chinese bank has said that it’s cooperating with Spanish authorities.
— With assistance by Alfred Liu, Jun Luo, and Crystal Chui