Watchdog Fines Santander UK $132 Million Over Money Laundering Failures
Santander UK was fined £107.7 million (US$132.2 million) on Friday after the Financial Conduct Authority (FCA) found "serious and persistent gaps" in the bank’s anti-money laundering controls at its business banking operations.
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,” said Mark Steward, the executive director of enforcement and market oversight at the FCA.
The financial watchdog imposed the penalty after an investigation found that between December 2012 and October 2017 the bank failed to properly oversee and manage its anti-money laundering measures, which impacted the oversight of over half a million business customers’ accounts.
These managerial failures, including the bank’s failure to respond to “red flags” associated with suspicious activity, such as automated monitoring alerts, left the institution vulnerable to money laundering risks. According to the FCA’s estimations, these failures resulted in at least £298 million ($365 million) passing through the bank before the accounts were shut down.
In one of the cases the watchdog cited, a new customer opened a Santander account as a small translations business expected to generate £5,000 ($6,136) each month. Within half a year, this account was receiving millions in deposits each month and transferring them to separate accounts.
Although the bank’s own anti-money laundering team advised that the account be closed, this suggestion was not acted upon until a year and a half later due to “poor processes and structures”. In the meanwhile, the suspicious customer continued to receive millions into the account.
The FCA said the bank made improvements to its anti-money laundering systems in 2013, but “changes did not adequately address the underlying weaknesses.” Later in 2017, the bank “decided to implement a comprehensive restructuring of its processes and systems.”
Santander chief executive Mike Regnier said, “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,” Regnier said. “ We have since made significant changes to address this by overhauling our financial crime technology, systems and processes.”
Regnier added that Santander now has more than 4,400 staff working on preventing financial crime.
Santander could have been fined £153 million ($188 million) by the financial authority, however it received a 30 percent reduction after the bank agreed to settle and not dispute FCA’s findings.
The biggest UK penalty levied by the FCA was in December 2021, when NatWest was fined more than £264 million ($324 million) for failing to prevent the laundering of nearly £400 million ($490 million). Black bin bags stuffed with cash, ready to be deposited, were involved in this case.
HSBC was also fined that same month, paying the FCA £64 million ($78 million) for failings in its anti-money laundering processes between 2010 and 2018.