The FCA has fined Santander UK Plc (Santander) £107,793,300 after
it found serious and persistent gaps in its anti-money laundering
(AML) controls, affecting its Business Banking customers.
Between 31 December 2012 and 18 October 2017, Santander failed to
properly oversee and manage its AML systems, which significantly
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.
Mark Steward, Executive Director of Enforcement and
Market Oversight at the FCA, said:
“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.
“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.”
In one case, a new customer opened an account as a small
translations business with expected monthly deposits of £5,000.
Within six months it was receiving millions in deposits, and
swiftly transferring the money to separate accounts.
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 keep the
account open 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 £298 million passing through the
bank before it closed the accounts.
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,
Santander 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 £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 £102.2
million, HSBC Bank plc £63.9 million,
and its investigation led to NatWest being fined £264.8
million.
Notes to editors:
