The FSA fines have come at an awkward time for Abbey

Abbey was fined �2m by the Financial Services Authority (FSA) - its largest penalty so far for failing to maintain proper checks on money laundering.

The FSA said Abbey failed to carry out proper controls at its retail banking unit from December 2001 to April 2003.

The FSA also imposed a �320,000 fine on Abbey's Asset Managers business.

'Lack of regard'

The financial regulator said Abbey had failed to ensure that suspicious activity reports were promptly considered and passed on to the National Criminal Intelligence Service.

The company was not reporting suspicious activity on a timely basis Abbey spokesman

FSA director Andrew Procter said: "The failure by Abbey to monitor compliance with FSA Money Laundering Rules demonstrated a marked lack of regard for its regulatory obligations."

A spokesman for Abbey said the bank would not be appealing against the fines, but insisted that action had already been taken to address the issue.

"There was no evidence of money laundering taking place although the company fully acknowledges that its methods for checking customer identification were inadequate," the spokesman said.

He added: "The company was not reporting suspicious activity on a timely basis."

Bad timing

The fines come at an awkward time for Abbey as Britain's second biggest mortgage bank struggles to reverse an earnings slump following a move into corporate banking.

The company recently changed its name from Abbey National as part of a wider shake-up at the group.