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Santander UK fined £108mn for anti-money laundering failures

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Santander UK has become the latest bank to be hit with a heavy fine by the country’s financial regulator over anti-money laundering failings.

The Financial Conduct Authority said on Friday that it had fined the UK division of the Spanish bank £107.8mn for failing to manage its systems properly, which affected the way it dealt with 560,000 business customers.

It is the largest fine Santander UK has received from the FCA and one of the regulator’s biggest anti-money laundering penalties.

The regulator found that between 2012 and 2017 the bank’s systems were not able to properly verify information provided by customers about their businesses.

“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, executive director of enforcement and market oversight at the FCA.

It is the latest sign of the UK regulator taking banks to task over their failure to stem flows of dirty money.

The FCA has previously taken action against three other UK lenders over their lax anti-money laundering procedures.

It fined HSBC £64mn in December 2021 and rebuked the bank for “serious weaknesses” in its anti-money laundering controls over an eight-year period.

In 2019, the FCA fined Standard Chartered £102mn following an investigation into the bank that found “significant shortcomings” that left the lender at risk of breaching sanctions.

The FCA’s investigation into NatWest led to the bank being fined £264.7mn by a London court after pleading guilty to failing to prevent a £365mn alleged money laundering scheme that involved £700,000 being carried through a shopping centre in black bin liners.

The regulator’s largest anti-money laundering fine to date was handed out to Deutsche Bank in 2017 after $10bn was transferred from Russia to offshore bank accounts “in a manner that [was] highly suggestive of financial crime”. The German lender was fined £163mn.

The regulator pointed to one case at Santander UK involving an account belonging to a customer with a small translation business. The company expected monthly deposits of £5,000 but within six months it was receiving millions in deposits and quickly moving the money elsewhere.

Although the bank’s anti-money laundering team had identified suspicious activity in March 2014, the request was not acted upon for a further 18 months.

“As a result, the customer continued to receive and transfer millions of pounds through its account,” the FCA said.

In other examples, the bank failed to respond to red flags that were raised over suspicious accounts, which resulted in £298mn passing through them before they were closed.

Santander UK chief executive Mike Regnier said: “We are very sorry for the historical anti-money laundering-related control issues in our business banking division between 2012 and 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.”

Santander UK would have been fined £154mn, but received a 30 per cent discount because it did not dispute the FCA’s findings and agreed to settle.

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