Britain’s financial regulator, the FCA, has penalised Santander bank for failing to stop money-laundering activities conducted by customers via business accounts between December 2012 and October 2017.
The Financial Conduct Authority (FCA) of the United Kingdom has imposed a £108 million fine on Santander UK after finding out that the bank failed to implement anti-money laundering (AML) controls, resulting in millions of pounds worth of suspicious funds being transacted through customer business accounts.
In its Investigation, the British financial watchdog revealed “serious and persistent gaps” in Santander’s oversight of its 560,000 strong business clients over a five-year period between December 2012 and October 2017. According to reports, the bank allowed more than £298 million to be processed through various business accounts that were being monitored by law enforcement for suspicious activity.
“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, Executive Director of Enforcement and Market Oversight at the FCA.
In one instance, a small translation service provider opened a business account with the intention of depositing £5,000 every month. Six months later, the account started to make significant amounts of transfers worth millions of pounds. Santander’s anti-money laundering department (AML) found that the account owner was misrepresenting their business and notified the matter to the bank on three separate occasions. The bank failed to act upon the recommendation, meaning the account remained open. When law enforcement officials asked Santander to track the account’s activity for a month, the bank failed to ensure regular oversight and missed another key moment to shut down. The account remained open for 18 months, processing about £269 million in various transactions in four years. It was only shut down after the FCA wrote to Santander UK informing about an investigation into the reported suspicious activity.
“Santander takes its responsibilities regarding financial crime extremely seriously. We are very sorry for the historical anti-money laundering-related control issues in our business banking division between 2012 and 2017,” said Mike Regnier, Chief Executive at Santander UK.
The bank was initially fined £154 million for its carelessness in the matter, but the FCA deducted 30% from the fee after Santander agreed to settle and not dispute its findings. Santander said that it took the initiative to address the AML issues once they were identified and have since made significant changes to overhaul its financial crime technology. The bank has more than 4,400 staff working on preventing financial crimes through its services.
Last year, the FCA penalised NatWest in a similar case of a lapse in anti-money laundering controls. Here, a Bradford-based jeweller called Fowler Oldfield opened a business account at the bank. The company with a reported annual turnover of £51 million, ended up depositing £365 million with NatWest over a period of five years, including £264 million in cash. The money was brought to the bank stuffed in black garbage covers and deposited into a vault. NatWest was fined £264 million for failing to stop the crime which it settled with the agency. In 2021, HSBC was fined £64 million for poor AML controls and Standard Chartered was fined £102.2 million for similar violations in 2019.