(Adds UBP spokeswoman statement)
HONG KONG, April 11 (Reuters) - The Hong Kong Monetary
Authority (HKMA) said on Tuesday it had ordered the local branch
of private bank Coutts & Co Ltd to pay a fine of HK$7 million
($900,800) for breaching anti-money laundering and
HKMA said the move followed a probe that found Coutts had
failed between April 2012 and June 2015 to set up and maintain
procedures for determining if "its customers or the beneficial
owners of its customers were politically exposed persons".
"Politically exposed persons" (PEPs) refers to people with a
prominent public function, whom regulators view as presenting a
higher risk for potential involvement in bribery and corruption
due to their position and the influence they may hold.
The HKMA's probe also found Coutts's Hong Kong branch had
failed to identify PEPs despite relevant information being
publicly available, it said in its order.
Furthermore, the private bank failed to follow up promptly
on "PEP alerts received from a commercially available database"
to which Coutts subscribed, the order said, adding the firm had
taken remedial measures to address the deficiencies identified.
Hong Kong authorities are under pressure from international
bodies to clamp down on illegal money flows following a number
of high profile cases that involved local firms, including a
corruption scandal that engulfed soccer body FIFA in 2015.
The Panama Papers leak also drew attention to how wealthy
individuals use offshore companies, many of them structured by
intermediaries based in Hong Kong, to conceal assets.
The global anti-money laundering body, the Financial Action
Task Force (FATF), is due to inspect Hong Kong's anti-money
laundering and counter-terrorist financing rules next year.
Royal Bank of Scotland sold the majority of Coutts'
international assets to Union Bancaire Privee (UBP) in March
2015 after splitting the bank, best known as banker to Britain's
Queen Elizabeth II, into a British and a Swiss-based arm.
"UBP acquired a portion of Coutts International's client
base, but not the legal entity itself - it was an asset only
deal. As such, UBP has not inherited any of Coutts' legal
liabilities," a spokeswoman for Coutts said in a statement.
In February, Coutts was ordered to pay 6.5 million Swiss
francs ($6.6 million) by Swiss watchdog FINMA for breaching
money laundering regulations in its relationships with
scandal-tainted Malaysian sovereign wealth fund 1MDB.
Singapore's central bank in December imposed a penalty of
2.4 million Singapore dollars ($1.7 million) on Coutts due to
money laundering breaches also related to 1MDB.
($1 = 7.7708 Hong Kong dollars)
(Reporting by Sumeet Chatterjee and Michelle Price; Editing by
Mark Potter and Louise Heavens)