The FCA has fined Nationwide Building Society £44m for inadequate
anti-financial crime systems and controls between October 2016 to
July 2021.
During this period, Nationwide had ineffective systems for
keeping up-to-date due diligence and risk assessments for all its
personal current account customers and for monitoring their
transactions.
Nationwide was also aware that some of those customers were using
their personal accounts for business activity, in breach of its
terms. Nationwide did not offer business current accounts at this
point, so did not have the right processes in place to manage the
financial crime risks from business activity.
This meant Nationwide was unable to effectively identify, assess,
monitor or manage the money laundering risks among its personal
current account customers. It also meant Nationwide did not have
an accurate picture of its customers who presented a higher risk
of financial crime.
In one serious case, Nationwide missed opportunities to identify
a customer using personal current accounts to receive fraudulent
Covid furlough payments. The customer received 24 payments
totalling £27.3m over 13 months, with £26.01m of this deposited
over 8 days. His Majesty's Revenue & Customs (HMRC) recovered
£26.5m, but approximately £800,000 remains unrecovered.
Therese Chambers, joint executive director of enforcement and
market oversight at the FCA, said:
'Nationwide failed to get a proper grip of the financial crime
risks lurking within its customer base. It took too long to
address its flawed systems and weak controls, meaning red flags
were missed with serious consequences.
'Building societies and banks have a key role in the fight
against financial crime. Firms must remain vigilant in this
fight.'
Nationwide was aware of weaknesses in its systems and controls
and undertook work to make improvements. However, it failed to
adequately address those weaknesses in a timely manner.
Nationwide subsequently commenced a large-scale financial crime
transformation programme in July 2021.
Notes to editors
- Read the Final Notice: Nationwide Building society
(PDF).
- Nationwide would have been fined £62,969,297, but it agreed
to resolve these matters and so qualified for a 30% discount
under the FCA's processes. The total fine is £44,078,500.
- The FCA continues to supervise firms to improve standards and
ensure that they have the right systems and controls to manage
financial crime risks. Since 2021, the FCA has imposed 13 fines –
totalling £300,767,526 – on banks for anti-money laundering
systems and controls failings.
- Fighting financial crime is a priority in
the FCA's 5-year strategy.
- The FCA enables a fair and thriving financial services market
for the good of consumers and the economy. Find out more about the
FCA.
