The Bermuda Monetary Authority has fined First Bermuda Group Ltd. (FBG) $100,000 for breaching anti-money laundering regulations.

FBG becomes the first firm to be fined under the BMA's enhanced enforcement powers under the Proceeds of Crime Regulations (Supervision and Enforcement) Act 2008, which allowed the regulator the ability to impose financial penalties on non-compliant organisations.

The breaches related to weaknesses in internal controls, including customer due diligence and staff training on anti-money laundering and anti-terrorist financing (AML/ATF) issues. The BMA said there was no evidence of any money laundering offences having taken place.

The BMA stressed yesterday that customer deposits at FBG remain safe and that the security of deposits was not impacted by the breaches.

The move sounds a warning to other firms to get their AML processes compliant with the law, or face being named and shamed, as well as fined, by the BMA.

BMA chief executive officer Jeremy Cox said the compliance failings in FBG's case were "comprehensive and serious and warranted the use of immediate enforcement action".

Mr. Cox added: "We wish to make it clear to the market, and companies should take note, that the Authority will not hesitate to take similar action against any firm where we find that essential anti-money laundering controls are lacking or are being implemented ineffectively.

"It is in all our interests that Bermuda's regulatory standards are not compromised in any way."

He added that in deciding the amount of the fine, the BMA had taken into account the steps FBG has taken since the start of the enforcement action to address the compliance issues.

The company has strengthened its management team, formed an action plan and additional resources for addressing the issues.

FBG chairman Eugene Bean said in a statement: "FBG is committed to working with our regulators to ensure a financial environment of the highest standard. FBG wishes to thank the BMA for allowing us to reach a quick settlement and conclusion to these unfortunate events.

"The Bermuda Monetary Authority has recognised the extent and significance of the remedial efforts initiated by FBG and that there was no evidence of money laundering attached to any account.

"As stated by the BMA, FBG deposits remain safe. We believe we now adhere to the very highest principles of AML and ATF regulations."

He said the company had been in breach of regulations relating to current customer contact and photo ID details, ongoing monitoring of customer relationships, the effective implementation of the firm's Policies and Procedures Manual and staff training on AML and ATF regulations.

Asked how the breaches had been allowed to happen, Mr. Bean told The Royal Gazette that one of the firm's problems had been "legacy issues" with customers of 15 to 20 years standing, from whom FBG had struggled to obtain the necessary documentation.

He said the company's staff had made repeated efforts to get the information.

Training on AML/ATF compliance was ongoing, he added.

Jonathan Clipper, who replaced Jeff Conyers as FBG's new CEO in July, said: "It's important to point out that these are control breaches and not financial strength breaches. And that is why we are also publishing our profit and loss accounts and balance sheet."

The details, together with an open letter from Mr. Bean, appear in an advertisement on page 9. They show that FBG made a profit of $1.51 million in the nine months through March 31, 2010, when the company's balance sheet showed total assets of $222.33 million and shareholders' equity of $14.59 million.

FBG is in negotiations with Bermuda Commercial Bank over a potential merger. A merger agreement between the two institutions lapsed in June, before the deal could be completed.

Mr. Bean said FBG, a 20 year-old savings and mortgage company based in the Maxwell Roberts Building in Church Street, was currently evaluating its options.

"This process has given us the opportunity to see what we have and it's given me a lot of faith in this company," Mr. Bean said.

"Now we have to consider our options and decide, in consultation with our shareholders, whether we want to be acquired or whether we want to stand alone."

William Kattan, the BMA's director, Legal Services and Enforcement, said the AML/ATF regulations were there to protect the firms themselves — as well as the reputation of Bermuda.

"If money laundering takes place, then it will be embarrassing for the firm involved and it will cause damage to the firm's reputation," Mr. Kattan said.

"Nobody wants to be in that predicament. The regulations are there to assist them to detect and prevent money laundering and activities related to financing of terrorism.

"When a company is in breach of the regulations, we can't allow that to continue. It's critical to protect the reputation of Bermuda."