BANKING group Abbey National received a record fine for failing to maintain effective procedures against money laundering.

The £2m penalty imposed by the Financial Services Authority (FSA) was accompanied by a further £320,000 fine for separate systems and control breaches at Abbey's Asset Managers business.

The fine was the second largest imposed by the FSA, and the largest for failing to meet money-laundering rules.

The investigation found that Abbey failed to carry out effective controls in its retail banking division between December 2001 and April this year.

The FSA said Abbey failed to ensure suspicious activity reports were promptly considered and reported to the National Criminal Intelligence Service (NCIS).

A spokesman said that 37 per cent of reports took between 30 and 90 days to pass from Abbey's money-laundering reporting office to the NCIS, with a further 12 per cent submitted more than 120 days later.

The FSA's money-laundering rules were introduced in December 2001 as part of a global crackdown on the funding of terrorist activities.

Andrew Procter, FSA director of enforcement, said: "The failure by Abbey National to monitor compliance with FSA money-laundering rules demonstrated a marked lack of regard for its regulatory obligations."

Abbey said it would not be appealing against the two fines, and had already taken action to address issues identified.

It said: "There was no evidence of money-laundering taking place, although the company fully acknowledges that its methods for checking customer identification were inadequate, and that the company was not reporting suspicious activity on a timely basis."

In the second case, Abbey National Asset Manager Limited was fined £320,000 for failing to address compliance shortcomings.