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Santander fined £107.7 million for anti-money laundering failures

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Written by: Rebecca Goodman
09/12/2022
Santander UK has been fined £107.7 million by the Financial Conduct Authority (FCA) for repeated anti-money laundering failures.

The watchdog said it found “serious and persistent gaps” in the bank’s anti-money laundering (AML) controls which impacted its 560,000 business customers.

It says Santander failed to properly oversee and manage these systems between 31 December 2012 and 18 October 2017.

The systems used by the bank were described as ineffective to adequately verify information provided by customers about their businesses.

Santander has not disputed the FCA’s findings and agreed to settle, which means it has qualified for a 30% discount.

Failure to monitor money passing through customer accounts

The FCA said Santander failed to properly monitor money that customers told them would be going through their accounts. This left the bank open to serious money laundering risks.

It cited one case where a new customer opened a small translations business with expected monthly deposits of £5,000. Yet within six months it was receiving millions in deposits, and then transferring the money to separate accounts.

Although the account was recommended for closure in March 2014, 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 this 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 said it also saw examples of the bank failing to promptly deal with red flags associated with suspicious activity, such as automated monitoring alerts.

These led to more than £298 million passing through the bank before it closed the accounts.

Santander knew about the weaknesses

The FCA says the bank knew there were significant weaknesses in its AML systems and controls and began a programme of improvements in 2013. But these improvements did not “adequately address the underlying weaknesses”.

In 2017, it decided to implement a comprehensive restructuring of its processes and systems.

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.”

The FCA has previously fined Standard Chartered Bank £102.2 million, HSBC Bank plc £63.9 million, and NatWest £264.8 million for failures to do with anti money laundering processes.

“Very sorry” for historical issues

Mike Regnier, chief executive officer for Santander, said: “Santander takes its responsibilities regarding financial crime extremely seriously. We are very sorry for the historical anti-money laundering (AML) related controls issues in our Business Banking division between 2012-17 highlighted in the FCA’s findings.

“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.

“Today over 4,400 staff are focused on preventing financial crime and we continue to invest to meet our responsibilities and keep our customers and communities safe.”

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