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The top five biggest fines to hit finance firms in 2022

Paloma Kubiak
Written By:
Paloma Kubiak
Posted:
Updated:
11/01/2023

The City watchdog dished out over £215m in fines to firms that fell foul of the rules last year. Here are the five with the biggest penalties.

We’re only in the second working week of 2023 and the Financial Conduct Authority (FCA) has already levied fines of nearly £12m to two firms relating to anti-money laundering failures.

Today, Al Rayan Bank has received a £4,023,600 fine for failing to make sure customer money which passed through it and was used in the UK was not connected to financial crime.

The fine would have been closer to £5.75m but as Al Rayan agreed with the FCA’s findings, it was granted a 30% discount.

And earlier this week, Guaranty Trust Bank was fined £7.6m over its failure to undertake adequate customer risk measures, often not assessing or documenting the money laundering risks posed by customers.

GT Bank also had a 30% discount, swerving a £10.9m fine as it did not dispute the FCA’s findings.

While these may seem big sums, a look back over 2022 reveals some major high street lenders were fined significantly more.

In total in 2022, the FCA issued more than £215.8m in fines, with one banking giant contributing half this sum. Here are the biggest five fines:

5) Metro Bank – £10m

In December, Metro Bank was hit with a £10m fine for publishing incorrect information to investors as part of historic quarterly financial results. It included Risk Weighted Assets (RWA) on which its regulatory capital requirements are based.

The lender was found to have given false information regarding the RWA figure in its third quarter trading update on 24 October 2018. The FCA said Metro Bank was aware at the time that this figure was wrong and failed to qualify it or explain that it was subject to an ongoing review and would require a substantial correction. It also failed to seek legal advice over the figure, which the FCA said showed it was not taking due care to mislead investors.

When the correct RWA figure was announced in January 2019, it contributed to a 39% fall in Metro Bank’s share price.

4) Citigroup Global Markets Limited – £12.6m

Issued in August, Citigroup Global Markets was found to have failed to properly implement market abuse regulations (introduced in 2016), particularly around detection.

The FCA said that by failing to properly implement the rules, Citigroup GM could not effectively monitor its trading activities for certain types of insider dealing and market manipulation. This resulted in significant gaps in its arrangements, systems and procedures. It qualified for a 30% discount, a reduction from the £17.9m it would have been fined.

3) Julius Baer International Limited – £18m

Towards the end of the year, the investment advisory and wealth management firm was fined just over £18m for failing to conduct its business with integrity; failing to take reasonable care to organise and control its affairs and for failing to be open and co-operative with the FCA.

It boiled down to finder’s arrangements fees for introducing Yukos Group companies to Julius Baer International (JBI) which the FCA claimed was on the understanding that Yukos Group companies would then place large cash sums with JB from which it could generate significant revenues. It meant uncommercial FX transactions were charged far higher than standard rates.

The FCA said these fees were improper and together with the uncommercial FX transactions showed a lack of integrity in the way in which JBI was undertaking this business.

2) TSB Bank – £29.7m

This fine related to the now infamous TSB IT system fiasco of 2018 which saw 5.2 million customers unable to access banking services following a botched data migration and process update.

That year it reported a pre-tax loss of £105.4m, saw its chief executive Paul Pester step down, over a 1,000 customers suffered fraud as a result, while tens of thousands of unhappy customers ditched the bank in the aftermath of the meltdown. It paid out £32.7m in redress to customers who were detrimentally affected, and in addition to the £29.7m fine from the FCA, the Prudential Regulation Authority (PRA) also put the boot in, levying its own £18.9m fine on the bank.

It paid £48m in total, but would have paid £69.5m if it failed to resolve the matter with both regulators.

1) Santander – £107.7m

The biggest fine of the year goes to banking giant Santander over repeated anti-money laundering failures.

The watchdog said it found “serious and persistent gaps” in the bank’s AML controls which impacted 560,000 business customers.

It said Santander failed to properly oversee and manage these “ineffective” systems between 31 December 2012 and 18 October 2017 so it could not adequately verify information provided by customers about their businesses.

In one case, a new customer opened an account 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. It also identified several other business banking accounts which Santander failed to manage correctly, leaving the bank open to serious money laundering risk. These failures led to more than £298m passing through the bank before it closed the accounts.

Santander did not dispute the FCA’s findings and agreed to settle, which means it qualified for a 30% discount. Without the discount, the financial penalty would have been closer to  £154m.