The UK arm of Spanish banking group Banco Santander has been fined £107.79mln by the Financial Conduct Authority (FCA) after the regulator found “serious and persistent gaps” in the bank’s anti-money laundering (AML) controls, affecting its business banking customers.
Over a period of almost five years, from end-2012 to mid-October 2017, Santander UK failed to properly oversee and manage its AML systems, which significantly impacted the account oversight of more than 560,000 business customers, the FCA said in a statement.
The bank did not adequately verify the information provided by customers about the business they would be doing and failed to properly monitor the money customers had told them would be going through their accounts.
"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,” commented Mark Steward, executive director of Enforcement and Market Oversight at the FCA in a statement.
The regulator highlighted a case where 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, it failed to keep track of this request and the account remained open until the FCA wrote to Santander in December 2016.
The FCA added that it had identified several other business banking accounts which Santander had not managed correctly, for example by failing to deal with 'red flags' associated with suspicious activity.
These failures led to more than £298mln passing through the bank before it closed the accounts, the FCA said.
The regulator said Santander UK has implemented a transformation and remediation programme and continues to invest in this.
The bank has agreed to settle with the FCA and therefore qualified for a 30% discount. Without the discount, the fine would have been £153.99mln.
The regulator said it has repeatedly stepped in and penalised firms for poor management of their AML systems and has previously fined Standard Chartered Bank £102.2mln and HSBC Bank PLC £63.9mln, while its investigation led to NatWest being fined £264.8mln.
"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," said Steward.