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Santander UK fined £107.7m for repeated AML failures

Santander UK fined £107.7m for repeated AML failures

The FCA has fined Santander UK Plc £107,793,300 after it found gaps in its anti-money laundering controls, affecting its business banking customers.

In an announcement, the FCA revealed that between 31st December 2012 and 18th October 2017, Santander did not efficiently manage its AML systems, which impacted the account oversight of more than 560,000 business customers.

The statement reads: "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."

The FCA highlighted one case where a new customer had opened an account as a small translations business with expected monthly deposits of £5,000. However, within six months it was receiving millions in deposits, and subsequently transferring the money to separate accounts to avoid detection.

The account was recommended for closure by Santander's AML team in March 2014, but inefficient processes meant that no action was taken until September 2015. During this time, the customer continued to receive and transfer millions of pounds. In September 2015, law enforcement advised Santander to keep the account open, but the bank failed to keep track and this account remained open until the FCA wrote to Santander in December 2016.

During this time, the FCA found several other Business Banking accounts that the bank failed to follow up on suspicious activity, leaving the bank open to money laundering risk. This led to over £298 million passing through the bank before it closed the accounts.

Santander was aware that there were significant weaknesses in its AML systems and a programme of improvements ensued in 2013. While there were minor improvements, the bank realised that these actions did not adequately address the underlying weaknesses and, in 2017, a comprehensive restructuring started - a programme that Santander continues to invest in.

Santander has not disputed the FCA’s findings and has agreed to settle, which means it has qualified for a 30% discount. Without the discount, the financial penalty would have been £153,990,400.

In the past, the FCA have fined Standard Chartered Bank £102.2 million for failing AML systems, HSBC Bank plc £63.9 million, NatWest £264.8 million.

Mark Steward, executive director of enforcement and market oversight at the FCA, says: "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."

Comments: (3)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 12 December, 2022, 10:49Be the first to give this comment the thumbs up 0 likes

More deposits means better rates, fees and service. Keen to know why a company that would deposit millions a few months after opening the account wouldn't state that upfront and enjoy superior relationship quality instead of £5000 while opening the account and getting inferior relationship quality?

Ingus Linkevics
Ingus Linkevics - Fairmay Ltd - London 29 December, 2022, 09:03Be the first to give this comment the thumbs up 0 likes

It's quite simple Ketharaman - the company prob never intended to transfer up to £5K a month but was just a coverup entity with intention to do what they did from the beginning. £5K expected turnover was just an easy entry point to have a bank account. From there on with limited controls they used the service for their real intents whatever they were or were not. This is exactly the reason banks and FIs are required to constantly improve their aml controls

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 29 December, 2022, 10:41Be the first to give this comment the thumbs up 0 likes


That makes sense from compliance pov. However, from business / PLBS pov, I'm guessing a bank will roll out the red carpet for an account with millions in deposit compared to another with merely 5K in deposits.

I remember reading a book (of fiction) about a private bank in Zurich. The RM goes to some country in West Asia for a meeting. A warlord / druglord hands over millions in cash and tells him to open an account in his bank in Zurich. The RM transits through three airports on the way to ZRH. As soon as he reaches his office, his boss scolds him for taking too much risk of getting caught on the way and tells him, "Next time we'll send a private jet"!  

In a bank that gets caught for breaking the law - rather than not fulfilling its goal of MSV - I'm guessing business pov will trump compliance pov:)