Financial giant Barclays Bank has been fined a total of £42m for two separate instances of failings in its financial crime risk management processes.
The Financial Conduct Authority (FCA) announced at the end of July that it had sanctioned Barclays Bank UK PLC for “inadequate controls that exposed the bank and its clients to heightened risks of money laundering and fraud” in its dealings with WealthTek.
The regulator found that Barclays Bank UK PLC failed to gather sufficient information about WealthTek before opening a client money account.
“One simple check it could have done was to look at the Financial Services Register before opening the account,” said the FCA. “Had it done so, it would have seen that WealthTek was not permitted by the FCA to hold client money.”
Clients went on to deposit £34 million into the account.
Following intervention by the FCA, Barclays agreed to make a voluntary payment of £6.3m to WealthTek clients facing shortfalls.
In the second case, the FCA fined Barclays Bank PLC £39.3m for “failing to adequately manage money laundering risks associated with providing banking services to Stunt & Co”.
The gold bullion firm and refinery was found to have received £46.8m from Fowler Oldfield, a multimillion-pound money laundering operation in the space of a year, which Barclays failed to identify.
It was adjudged by the FCA that Barclays failed to properly consider the money laundering risks associated with the firm even after receiving information from law enforcement about suspected money laundering through Fowler Oldfield, and after learning that the police had raided both firms.
Barclays only conducted a review of its exposure to Fowler Oldfield through its customers, including Stunt & Co, after it learned of the FCA’s decision to prosecute NatWest over its relationship with Fowler Oldfield.
By providing banking services to Stunt & Co, Barclays facilitated the movement of funds linked to financial crime, said the FCA in its statement.
Therese Chambers, Joint Executive Director of Enforcement and Market Oversight at the FCA, said: “The consequences of poor financial crime controls are very real – they allow criminals to launder the proceeds of their crimes, and they allow fraudsters to defraud consumers.
“Banks need to take responsibility and act promptly, particularly when obvious risks are brought to their attention.
“In the first of these cases, Barclays secured a significant reduction in its fine through its extensive co-operation with our investigation and through making a voluntary payment to affected consumers at our request.”
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