Santander UK fined £108m over anti-money laundering failings

Financial Conduct Authority found ‘serious and persistent gaps’ in bank’s controls

Santander UK has been fined more than £100m after an investigation by the British financial watchdog found “serious and persistent gaps” in its money laundering controls, resulting in hundreds of millions of pounds of suspicious transactions through customer accounts.

The Financial Conduct Authority (FCA) imposed the £107.7m penalty after an investigation found that between December 2012 and October 2017 the bank failed to “properly oversee and manage” the controls that affected the oversight of more than 560,000 business customers.

The FCA said more than £298m passed through business accounts at the bank that had received “red flags” over suspicious activity that Santander had failed to act upon.

“Santander’s poor management of their anti-money laundering systems and their inadequate attempts to address the problems created a prolonged and severe risk of money laundering and financial crime,” said Mark Steward, the executive director of enforcement and market oversight at the FCA.

The watchdog gave the example of one case of a new business customer who opened an account as a small translations business, with the expectation of monthly deposits of about £5,000, which within six months become a conduit for the movement of millions of pounds to other accounts.

The bank’s own anti-money laundering (AML) team recommended the account be shut but “poor processes and structures” meant this was not acted upon for 18 months.

Law enforcement subsequently asked Santander to keep the account open to track activity for a month. However, the bank “failed to keep track of this request” and it remained open until the FCA wrote to Santander about the activity on the account more than a year later.

“Santander takes its responsibilities regarding financial crime extremely seriously,” said Mike Regnier, the chief executive. “We are very sorry for the historical anti-money laundering-related controls issues in our business banking division between 2012 and 2017.”

The bank said that business customers made up only 4% of its entire UK customer base in 2017.

The FCA could have fined Santander as much as £154m. However, a 30% deduction was made after the bank agreed to settle and not dispute its findings.

“While we took action to address AML issues once they were identified, we accept that our framework at the time should have been stronger,” Regnier said. “We have since made significant changes to address this by overhauling our financial crime technology, systems and processes.”

Santander said it now has more than 4,400 staff working on preventing financial crime.

In December the FCA fined NatWest more than £264m for anti-money laundering failures that involved black bin liners stuffed full of cash being deposited, and sums so large that one branch’s two floor-to-ceiling safes proved “inadequate” for storing it all.

Earlier that year, HSBC was fined £64m relating to poor money-laundering controls, and in 2019 the FCA fined Standard Chartered Bank £102.2m.

“As part of our commitment to prevent and reduce financial crime, we continue to take action against firms which fail to operate proper anti-money laundering controls,” Steward said.


Mark Sweney

The GuardianTramp

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