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The FCA fines Santander for almost GBP 108 mln

Friday 9 December 2022 11:22 CET | News

UK’s Financial Conduct Authority (FCA) has fined Santander UK GBP 107.793.300 after it found serious and persistent gaps in its anti-money laundering (AML) controls.

 

The authority indicates that between 31 December 2012 and 18 October 2017, Santander failed to properly oversee and manage its AML systems, which impacted the account oversight of more than 560,000 business customers.

Santander had ineffective systems to adequately verify the information provided by customers about the business they would be doing. The firm also failed to properly monitor the money customers had told them would be going through their accounts compared with what actually was being deposited.

The risks involved

As FCA representatives suggest, the problems created a prolonged and severe risk of money laundering and financial crime. In one case, a new customer opened an account as a small translations business with expected monthly deposits of GBP 5.000. Within six months it was receiving millions in deposits, and swiftly transferring the money to separate accounts.

UK’s Financial Conduct Authority (FCA) has fined Santander UK GBP 107.793.300 after it found serious and persistent gaps in its anti-money laundering (AML) controls.

 

Although the account was recommended for closure by the bank’s own AML team in March 2014, poor processes and structures meant that this was not acted upon until September 2015. As a result, the customer continued to receive and transfer millions of pounds through its account. 

Santander agreed to a request from law enforcement to close the account in September 2015, however, it failed to keep track of this request and the account remained open until the FCA wrote to Santander in December 2016.

The FCA identified several other Business Banking accounts which Santander failed to manage correctly, leaving the bank open to serious money laundering risk. There were also examples of the bank failing to promptly deal with ‘red flags’ associated with suspicious activity, such as automated monitoring alerts. These failures led to more than GBP 298 million passing through the bank before it closed the accounts.

What lead to this?

Santander knew that there were significant weaknesses in its AML systems and controls and began a programme of improvements in 2013. While these changes resulted in some improvements, the bank concluded that the changes did not adequately address the underlying weaknesses and, in 2017, decided to implement a comprehensive restructuring of its processes and systems. Santander UK continues to invest in its ongoing transformation and remediation programme.  

Santander has not disputed the FCA’s findings and agreed to settle, which means it has qualified for a 30% discount. Without the discount, the financial penalty would have been GBP 153,990,400. As part of its role to protect consumers and the market, the regulator has repeatedly stepped in and penalised firms for poor management of their AML systems. For example, it has fined Standard Chartered Bank GBP 102.2 million, HSBC Bank plc GBP 63.9 million, and its investigation led to NatWest being fined GBP 264.8 million.


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Keywords: fraud management, fraud detection, AML, financial crime
Categories: Fraud & Financial Crime
Companies: FCA, Santander
Countries: United Kingdom
This article is part of category

Fraud & Financial Crime

FCA

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Santander

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