Santander UK has been fined greater than £100m after an investigation by the British monetary watchdog discovered “critical and chronic gaps” in its cash laundering controls, leading to lots of of hundreds of thousands of kilos of suspicious transactions by buyer accounts.
The Monetary Conduct Authority (FCA) imposed the £107.7m penalty after an investigation discovered that between December 2012 and October 2017 the financial institution didn’t “correctly oversee and handle” the controls that affected the oversight of greater than 560,000 enterprise clients.
The FCA mentioned greater than £298m handed by enterprise accounts on the financial institution that had obtained “purple flags” over suspicious exercise that Santander had didn’t act upon.
“Santander’s poor administration of their anti-money laundering methods and their insufficient makes an attempt to deal with the issues created a chronic and extreme danger of cash laundering and monetary crime,” mentioned Mark Steward, the chief director of enforcement and market oversight on the FCA.
The watchdog gave the instance of 1 case of a brand new enterprise buyer who opened an account as a small translations enterprise, with the expectation of month-to-month deposits of about £5,000, which inside six months turn into a conduit for the motion of hundreds of thousands of kilos to different accounts.
The financial institution’s personal anti-money laundering (AML) workforce really useful the account be shut however “poor processes and buildings” meant this was not acted upon for 18 months.
Regulation enforcement subsequently requested Santander to preserve the account open to observe exercise for a month. Nevertheless, the financial institution “didn’t preserve observe of this request” and it remained open till the FCA wrote to Santander in regards to the exercise on the account greater than a yr later.
“Santander takes its obligations relating to monetary crime extraordinarily significantly,” mentioned Mike Regnier, the chief government. “We’re very sorry for the historic anti-money laundering-related controls points in our enterprise banking division between 2012 and 2017.”
The financial institution mentioned that enterprise clients made up solely 4% of its complete UK buyer base in 2017.
The FCA might have fined Santander as a lot as £154m. Nevertheless, a 30% deduction was made after the financial institution agreed to settle and never dispute its findings.
“Whereas we took motion to deal with AML points as soon as they had been recognized, we settle for that our framework on the time must have been stronger,” Regnier mentioned. “We now have since made vital modifications to deal with this by overhauling our monetary crime expertise, methods and processes.”
Santander mentioned it now has greater than 4,400 workers engaged on stopping monetary crime.
In December the FCA fined NatWest greater than £264m for anti-money laundering failures that concerned black bin liners stuffed filled with money being deposited, and sums so massive that one department’s two floor-to-ceiling safes proved “insufficient” for storing all of it.
Earlier that yr, HSBC was fined £64m regarding poor money-laundering controls, and in 2019 the FCA fined Customary Chartered Financial institution £102.2m.
“As a part of our dedication to stop and cut back monetary crime, we proceed to take motion in opposition to corporations which fail to function correct anti-money laundering controls,” Steward mentioned.