Banks in the UK have been hit with more than £250mn of fines for financial crime failings since the beginning of last year, with compliance and legal experts suggesting there will be no let-up in penalties from the regulator.
According to figures from the Financial Conduct Authority’s website, which have yet to be updated to include last week’s £42mn penalty against Barclays, UK banks have been fined £251.4mn since the start of 2024 for anti-money-laundering lapses.
And the belief is there will be many more fines to come, with exclusive figures obtained by The Banker showing that eight in 10 banks admit to skipping basic checks on new customers.
The data, based on responses from compliance officers, finds that 82 per cent of UK lenders say they do not always verify new individual customers, while only 6 per cent run daily checks on existing clients — viewed as a worryingly low statistic given the fast-moving nature of sanctions updates and red flags.
Phil Cotter, chief executive of SmartSearch, the digital compliance firm that carried out the research for The Banker, says: “Worryingly, our findings suggest these issues are systemic, with the vast majority of banks admitting that, despite the risks, they do not have robust procedures in place, meaning an anti-money-laundering scandal of this size was just waiting to happen — and will happen again.”
Abdulali Jiwaji, a banking litigation partner at Signature Litigation, adds: “There is zero chance of a let-up. The FCA will continue to target anti-money-laundering failures.”
Indeed, just a few days before Barclays’ £42mn penalty, Monzo was fined £21mn. The challenger bank’s financial crime controls failed to keep pace with its customer and product growth, the FCA said.
Therese Chambers, joint executive director of enforcement and market oversight for the FCA, said in a statement: “Banks are a vital line of defence in the collective fight against financial crime. They must have the systems in place to prevent the flow of ill-gotten gains into the financial system. Monzo fell far short of what we, and society, expect.”
Despite the recent flurry of activity from the watchdog, however, some suggest the UK regulator could be doing far more than it is, and that banks are taking advantage of the relative inaction.
Between 2016 and 2024, FCA fines have averaged £235mn annually, while from 2013 to 2015, the regulator issued penalties of £2.8bn, more than the following nine years put together.
Brett Erickson, a financial crime and compliance specialist, says: “Enforcement hasn’t vanished but it’s become predictable and survivable. Banks are making calculated bets. The UK hasn’t made financial crime a reputational or structural risk, unlike in the US where TD Bank and Wells Fargo [which were hit with fines worth billions of dollars] became cautionary tales. Without that pressure, there’s no real incentive to change behaviour.”
Speaking specifically about the Barclays failure, Cotter adds: “What’s striking in this case is that the warning signs were there — missing permissions, law enforcement alerts, and even police raids — yet basic due diligence and ongoing monitoring were either absent or ignored. This is alarmingly similar to what we’ve seen elsewhere, where the rules exist but aren’t properly applied.
“A scandal like this was, unfortunately, inevitable.”
Source: The Banker
