By Stephen Rae for AMLi
BRITAIN’S Financial Conduct Authority (FCA) today announced it has fined Santander almost £108M for AML failures in its business banking division.
The FCA ruled the UK division of the Spanish bank had failed to manage its anti-money laundering systems properly – affecting the way it dealt with 560,000 business customers.
Between 2012 and 2017 the bank’s systems were not able to verify properly information provided by customers about their businesses.
“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.
Santander did not dispute the regulator’s findings and agreed to settle, which means it has qualified for a 30% discount, bringing the fine to £107.8M. Without the discount, the financial penalty would have been £154M.
The FCA highlighted one case involving an account belonging to a customer with a small translations business. The company expected monthly deposits of £5,000 but within six months it was receiving millions in deposits and quickly moving the money elsewhere.
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,” the FCA concluded.
The regulator has acknowledged that Santander UK is investing in its ongoing transformation and remediation programme.
Meanwhile Santander UK chief executive Mike Regnier apologised for what he described as historical failings.
“We are very sorry for the historical anti-money laundering-related control issues in our business banking division between 2012-17 highlighted in the FCA’s findings,” said Regnier.
“While we took action to address our AML issues once they were identified, we accept that our AML framework at the time should have been stronger. We have since made significant changes to address this by overhauling our financial crime technology, systems and processes,” he added.
The FCA has previously penalised firms for poor management of their AML systems. 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.