Cyprus Mail

CBC fines Hellenic Bank €1.1m after spotting AML shortcomings

The Central Bank of Cyprus said it had fined Hellenic Bank, Cyprus’s third largest lender in excess of €1.1m for failing to comply with provisions of the anti-money laundering and terrorist financing legislation and the know-your-client obligation.

An on-site examination conducted in September 2014 spotted omissions or weaknesses from Hellenic’s “activities in the preceding years” and relate primarily to incomplete due diligence measures and customer identification, the supervisory authority said in a statement on its website. Hellenic failed to construct detailed customer business profiles and monitor transactions, according to the central bank’s statement.

“The imposition of the fine does not constitute identification of incidents of suppression of proceeds from illegal activities,” the Central Bank of Cyprus added. “The Central Bank of Cyprus considers it necessary to clarify that, following the completion of the onsite examination and before the imposition of the administrative fine, Hellenic Bank provided acceptable to the CBC assurances as to the assumption of corrective measures,” immediately after the completion of the on-site examination.

The fine imposed on Hellenic Bank, which will be reduced to €973,250 if the lender pays it before July 20, is the second highest after the €1.2m on Tanzania’s FBME Bank Ltd, which had its licence revoked subsequently.

The central bank added that that Hellenic took steps towards better compliance before the imposition of the fine.

“Furthermore, it is noted that Hellenic Bank’s board and management are committed to work in close and transparent cooperation with the Central Bank of Cyprus in order for Hellenic Bank to be fully in line with the legal and regulatory framework for preventing and combating money laundering,” the supervisor continued adding that its decision “underlines its commitment to the international standards, strict compliance with the legal and regulatory framework as well as zero tolerance to any acts, omissions or weaknesses whenever these occur or have occurred which could lead to the exploitation of the Cypriot banking system for the purposes of illicit activities”.

The bank said that it agreed to settle the fine prompted by “historical shortcomings” identified by its supervisor in a timely manner and so benefit from a 15 per cent discount. “As part of this restructuring, a number of client accounts have been closed”.

The Cyprus Business Mail understands that Hellenic terminated more than 8,000 customer accounts, as part of its improved compliance.

“The penalty does not relate to any identification of incidents of suppression of proceeds from any illegal activities,” the bank said in an emailed statement. “The penalty paid was discounted by fifteen per cent after Hellenic Bank agreed to settle in a timely manner.

Hellenic chief executive officer Bert Pijls said that the bank has significantly overhauled its governance and risk management procedure since 2014 “procedures under a new board and executive management team”.

“We have made appropriate investments in our systems in recent years to meet required international standards while also devoting increased human resources to maintain and improve compliance,” Pijls said. “We remain committed to ensuring no form of financial crime has a place at Hellenic Bank. We look forward to maintaining our close and transparent cooperation with the relevant authorities and to continuing to support our valued clients and business partners.”

Following its post-banking crisis recapitalisation, the lender, which was previously run by the Church of Cyprus, is mainly owned by the U.S.-based hedge fund Third Point and the Nicosia-based entertainment software developer

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