Bank of Beirut’s UK arm fined for misleading watchdog (March 2015)

- by Kelly Richards

In the UK, it is easy to find an affordable lender, but finding a trustworthy company can be harder than you expect. While there are many organisations out there, there is no way to be sure that the information you get is honest. When it comes to choosing a bank or group, you need to make sure that you are aware of their ethics.

FCA Compliance series - Cashfloat

There are two primary regulators or ‘watchdogs’ in Britain that oversee what happens here. The FCA and PRA seek to protect the financial services in the UK. In fact, the FCA have published a series of guidelines to which all companies should adhere. In reality, that means that only a responsible lender can deal with people. That is to say that if a corporation is corrupt, the regulatory bodies should deal with it as soon as possible.

When you choose a bank, you want to know that they will do everything they can to protect your finances. Whether you need short-term loans or just affordable cash advice, you have to make sure that you get the best possible level of service. It may surprise you to learn that there is a grave threat of crime within the financial world. Thus, each bank and corporation has to do all they can to make sure that there is no criminal activity within their ranks. It is not easy or straightforward, but it is necessary.

In the recent case of the Bank of Beirut, the officials failed to uphold financial crime controls. When they should have cooperated with the regulators, they avoided doing so. Let’s take a look at this case and the events that unfolded after it came to light.

The FCA and their power

First, you should understand what power the FCA has. This watchdog oversees everything that happens in the global money sector. If one of the major or minor financial companies breaks their rules, they have the power to punish them accordingly. For example, if they fail to meet the high standards that the FCA impose, they could risk a penalty fee or, worse, a ban from the entire sector. Despite the power that the regulator has, some corporations still ignore them. In these cases, the watchdog must take action against the companies.

Usually, the regulatory service must launch a full investigation into a case before it takes action. The officials gather information about each situation before they report on their findings. After they have completed their inquiry, they decide what form of penalty each case warrants.

The Bank of Beirut

Founded in 1963, the Bank of Beirut is a Lebanese corporation that operates globally. The firm offers both massive business deals and even payday loans and is popular with many clients. The Beirut Stock Exchange lists the bank as well. The current CEO is Salim G. Sfeir. Over the years, the bank has become famous in Lebanon and is an ever-growing corporation.

What are financial crime controls?

Of course, if there is any crime that takes place within a business, it is the management team and CEO’s who are culpable. That means that each firm has to have proper financial crime controls in place to prevent anything from happening. If the FCA believes that there may be criminal activity in a particular business, they will suggest a course of action. At this point, it is crucial that the management team take proper measures to make sure that they resolve the problem. If they fail to take the steps, they will receive a fine. If they want to keep things as secure as possible, it is in their interest to keep these controls tight. If, on the flip side, the bank has something to hide, they might avoid making any progress in this area.

Misleading information

In this case, the British subsidiary of Bank of Beirut received information from the regulators. At this point, the regulators ordered them to take care of some issues in the criminal prevention sector of the business. Despite the fact that the bank had a formal order, they failed to hand over the right information to the authorities. That means that the FCA did not get the details they needed to aptly deal with this case. Over an extended period, the officials at the banking group repeatedly gave false information to the FCA. The watchdog should command a level of respect when dealing with corporations. It is clear from this stubborn refusal to comply that the bank does not respect the authorities.

Could the FCA have prevented this case?

In March this year, the FCA issued a fine. Before this point, the inquiry was not complete, and so they had no grounds for punishing the bank. There is little the watchdog could have done to prevent this from taking place. Aside from suggesting the steps that the bank should take, they have little power when it comes to dealing with these firms. That is to say that they need to impose strict regulations when it comes to dealing with all the main bank groups.

FCA fines and penalties

The penalty for this incident of misconduct came to £2.1 million. It took the watchdog just 126 days to complete this investigation, which meant that they could discipline the bank. The regulatory body also deemed the bank to be a high-risk corporation. As a consequence of their actions here, they decided to ban the bank from signing up any new customers at this point. The regulator said that there is a risk of money laundering and even fraud here.


It is crucial that the watchdogs here in the UK keep a close eye on everything that happens in the financial sector. That means that they have to take action as soon as they realise that there is a problem. In this case, it took the FCA a short period to investigate the incident. This story should serve as a warning to banking officials who think nothing of withholding things. The FCA ought to continue in their work when it comes to this issue.

About The Author
Kelly Richards
Kelly Richards is the founder of the Cashfloat blog and has been working tirelessly to produce interesting and informative articles for UK consumers since the blog's creation. Kelly's passion is travelling. She loves her job because she can do it from anywhere in the world! Whether inspiration hits her while sitting on the balcony of a French B&B, or whether she is struck with an idea in a roadside cafe in Moscow, she will always make sure that the idea comes to fruition. Kelly's insights come from her knowledge gained while completing her degree in Economics and Finance as well as from the people she meets around the world. Her motto is: Everyone you meet has something valuable to teach you, so meet as many people as you can!
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