Bank of Scotland hit by £1.25m records fine

Bank of Scotland was today fined £1.25million for breaching money-laundering rules, the second biggest penalty ever for such offences.

The main City regulator, the Financial Services Authority, criticised the bank for failing to keep proper customer records, although there was no evidence of actual money laundering.

Failings were found in more than half of all customer records in a sample taken in late 2002. The weaknesses were found in the consumer, corporate and small business banking divisions, the FSA said.

This could have "seriously undermined" the bank's ability to help police and other law enforcement agencies trying to tackle criminals using the UK financial system to launder money, the FSA said.

The biggest ever fine for breaches of money-laundering rules was a £2 million penalty meted out to Abbey National last month. Royal Bank of Scotland and Northern Bank have also been fined.