Santander UK Fined £107.8M by FCA for Repeated AML Failures

Santander UK has been fined £107,793,300 by the UK Financial Conduct Authority (FCA) because of serious and persistent gaps in the bank's anti-money laundering (AML) controls, which have affected its business banking customers.

Through the investigation, the regulator found that Santander UK failed to properly monitor and manage its AML systems between 31 December 2012 and 18 October 2017, significantly affecting its oversight of more than 560,000 business accounts.

In one case, a new customer opened an account as a small translations business and was expected to deposit £5,000 a month. 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.

The UK watchdog identified several other Business Banking accounts which Santander failed to manage correctly, leaving the bank open to serious money laundering risk. The bank also failed to deal with suspicious account activity in a timely manner, which led to more than £298m passing through the accounts before they were closed.

Santander knew that there were significant weaknesses in its AML systems and controls and began to improve them in 2013, but did not get to the root of the problem. In 2017, the bank decided to implement a comprehensive restructuring of its processes and systems.

Santander UK continues to invest in its ongoing transformation and remediation programme. Earlier in last month, the bank issued a notice​ stating that crypto investments can be high risk, so it has placed a payment limit on each transaction in crypto.

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

As part of its role to protect consumers and the market, the regulator has repeatedly stepped in and penalised firms for poor management of their AML systems. For example, it has fined Standard Chartered Bank £102.2 million, HSBC Bank plc £63.9 million, and its investigation led to NatWest being fined £264.8 million.