The UK regulator the Financial Conduct Authority (FCA) has fined Santander UK Plc £107,793,300 for what the financial services watchdog called serious and persistent gaps in the bank’s anti-money laundering (AML) controls.
Between December 2012 and October 2017, Santander failed to properly oversee and manage its AML systems, which affected the account oversight of more than 560,000 business customers.
Chief Executive Officer, Mike Regnier, 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.”
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 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 actually was being deposited. 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.
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, the bank 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. Also the bank failed to promptly deal with cases of ‘red flags’ associated with suspicious activity, such as automated monitoring alerts. These failures led to more than £298m 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 on a restructuring of its processes and systems.
Santander has not disputed the FCA’s findings and agreed to settle, which means it has qualified for a 30pc discount. The FCA has fined others for poor management of their AML: Standard Chartered Bank £102.2m, HSBC Bank plc £63.9m, and NatWest £264.8m.
