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Santander was fined £108 million for AML violations

Santander has been penalised about £108 million by the Financial Conduct Authority (FCA) of Great Britain for AML violations in its business banking division, the FCA revealed today.

The Spanish bank's UK division was found by the FCA to have improperly managed its anti-money laundering procedures, which had an impact on how it handled with 560,000 business customers.


The bank's systems were unable to adequately validate customer-provided information about their businesses between 2012 and 2017.


According to Mark Steward, executive head of enforcement and market oversight at the FCA, "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."


Santander did not contest the regulator's conclusions and chose to settle, therefore the fine was reduced by 30% and now stands at £107.8M. The penalty would have been £154M had there been no discount.


The FCA singled out one instance involving an account that belonged to a client who managed a small translation company. The company anticipated receiving deposits of £5,000 per month, but after six months it was receiving deposits totalling millions and quickly transferring the money elsewhere.

The bank's own AML team suggested closing the account in March 2014, but due to ineffective procedures and organizational structures, nothing was done about it until September 2015. As a result, the client's account continued to receive and send millions of pounds.


In September 2015, Santander granted a request from law enforcement to keep the account open, but it failed to keep track of this request, so the account stayed open until the FCA wrote to Santander in December 2016.


The FCA found that Santander mismanaged a number of additional Business Banking accounts, putting the bank at considerable risk for money laundering. There were also instances where the bank ignored 'red flags' linked to questionable conduct, like automated monitoring alerts.


Before the accounts were terminated, more than £298 million had been transferred through the bank as a result of these breaches.


"Santander knew that there were significant weaknesses in its AML systems and controls and began a programme of improvements in 2013. While these changes resulted in some improvements, Santander concluded that the changes did not adequately address the underlying weaknesses and, in 2017, decided to implement a comprehensive restructuring of its processes and systems ," the FCA said.


Santander UK is investing in its ongoing transformation and remediation program, the regulator has acknowledged.


Meanwhile, Mike Regnier, chief executive of Santander UK, apologized for what he called historical failings.


Regnier stated: "We are very sorry for the historical anti-money laundering-related control issues in our business banking division between 2012-17 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 ," he continued.


The FCA has in the past fined businesses for mismanaging their AML procedures. It has levied fines of £102.2 million against Standard Chartered Bank, £63.9 million against HSBC Bank plc, and £264.8 million against NatWest as a result of its inquiry.

By fLEXI tEAM



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