FCA fines Santander UK £107.7m for cash laundering failures

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The FCA has fined Santander UK Plc (Santander) £107,793,300 for “severe and protracted gaps” in its anti-money laundering (AML) controls.

The ‘purple flag’ failures relate to the Spanish-owned financial institution’s Enterprise Banking prospects.

Almost £300m was transferred via the financial institution with out correct checks.

Between 31 December 2012 and 18 October 2017, the financial institution did not correctly oversee and handle its anti-money laundering controls, the FCA mentioned. This “considerably impacted” the account oversight of greater than 560,000 enterprise prospects.

The regulator mentioned that in in a single case a brand new buyer opened an account with Santander as a small translations enterprise with anticipated month-to-month deposits of £5,000. Inside six months it was receiving tens of millions in deposits and swiftly transferring the cash to separate accounts.

Though the account was really useful for closure by the financial institution’s personal AML workforce in March 2014, poor processes and constructions meant that this was not acted on till September 2015. Because of this, the client continued to obtain and switch tens of millions of kilos via its account.

Santander agreed to a request from regulation enforcement to maintain the account open in September 2015, nevertheless, it did not hold observe of this request and the account remained open till the FCA wrote to Santander in December 2016.

The watchdog discovered that Santander had “ineffective methods” to adequately confirm the knowledge offered by prospects concerning the enterprise they’d be doing.

The agency additionally did not correctly monitor the cash prospects had instructed them can be going via their accounts in contrast with what was really being deposited.

The FCA recognized a number of different Enterprise Banking accounts which Santander did not handle appropriately, leaving the financial institution open to severe cash laundering threat. There have been additionally examples of the financial institution failing to promptly cope with ‘purple flags’ related to suspicious exercise, akin to automated monitoring alerts.

The failures led to greater than £298 million passing via the financial institution earlier than it closed the accounts.

Santander knew that there have been vital weaknesses in its AML methods and controls and started a programme of enhancements in 2013. Whereas these adjustments resulted in some enhancements, Santander concluded that the adjustments didn’t adequately handle the underlying weaknesses and, in 2017, determined to instigate a complete restructuring of its processes and methods. Santander UK continues to put money into its ongoing transformation and remediation programme, the FCA mentioned.

Mark Steward, govt director of enforcement and Market Oversight on the FCA, mentioned: “Santander’s poor administration of their anti-money laundering methods and their insufficient makes an attempt to deal with the issues created a protracted and extreme threat of cash laundering and monetary crime.

“As a part of our dedication to stop and cut back monetary crime, we proceed to take motion in opposition to corporations which fail to function correct anti-money laundering controls.”

Santander didn’t dispute the FCA’s findings and agreed to settle, qualifying for a 30% low cost. With out the low cost, the monetary penalty would have been £153,990,400

The high quality is certainly one of a collection by the regulator on main banks as a result of anti-money laundering failures. Customary Chartered Financial institution has been fined £102.2m, HSBC Financial institution plc £63.9m, and NatWest fined £264.8m.




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