The FCA has fined Santander UK Plc (Santander) £107,793,300 for “serious and persistent gaps” in its anti-money laundering (AML) controls.
The ‘red flag’ failures relate to the Spanish-owned bank’s Business Banking customers.
Nearly £300m was transferred through the bank without proper checks.
Between 31 December 2012 and 18 October 2017, the bank failed to properly oversee and manage its anti-money laundering controls, the FCA said. This “significantly impacted” the account oversight of more than 560,000 business customers.
The regulator said that in in one case a new customer opened an account with Santander 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 on 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 watchdog found that 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 was actually being deposited.
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.
The 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 instigate a comprehensive restructuring of its processes and systems. Santander UK continues to invest in its ongoing transformation and remediation programme, the FCA said.
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.”
Santander did not dispute the FCA’s findings and agreed to settle, qualifying for a 30% discount. Without the discount, the financial penalty would have been £153,990,400
The fine is one of a series by the regulator on major banks due to anti-money laundering failures. Standard Chartered Bank has been fined £102.2m, HSBC Bank plc £63.9m, and NatWest fined £264.8m.
