The Hong Kong Monetary Authority (HKMA) has fined Coutts’ local unit HKD7m ($900,698) and reprimanded it for violating anti-money laundering and counter-terrorist financing regulations.

The move follows a probe conducted by the financial regulator that revealed breach of five provisions of the rules by Coutts Hong Kong between April 2012 and June 2015.

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HKMA alleged that the private banking firm failed to implement adequate procedures for determining whether its customers or the beneficial owners of its customers were politically exposed persons (PEPs).

The regulator’s probe also unveiled that Coutts Hong Kong secured senior management approval for continuing a business relationship with a customer even after knowing that the customer was a PEP.

The regulator alleged that the bank failed to identify PEPs in spite of the public availability of the concerned information, as well as follow up on PEP alerts received from a commercially available database to which it subscribed.

“These failures were symptomatic of the deficiencies in procedures,” the regulator said.

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HKMA executive director (enforcement and AML) Meena Datwani said: “This is a case about deficiencies in the AML/CTF systems and controls which led in some cases to the failure to identify PEPs and in other cases to the failure to seek senior management approval to continue business relationships with PEPs.

PEPs are individuals whose prominent position in public life may make them vulnerable to corruption and they therefore pose a higher risk of money laundering. Banks are expected to have in place AML/CTF systems and controls that are commensurate with the risks presented and the HKMA will take enforcement action where appropriate to reinforce this message. ”

The fine by HKMA comes soon after the bank was fined CHF6.5m by Swiss financial market supervisor Finma for breaching money laundering regulations linked to scandal-ridden Malaysian sovereign wealth fund 1Malaysia Development Berhad (1MDB).

Earlier in December 2016, the bank was also fined SGD2.4m by the Monetary Authority of Singapore (MAS) for violation of anti-money laundering requirements linked to 1MDB.