From December 31, 2012 to October 18, 2017, Santander failed to properly monitor and manage its AML system. This had a major impact on monitoring the accounts of over 560,000 corporate customers and the bank was fined.
Santander had an ineffective system to adequately validate information provided by customers about the business they do. The company also failed to properly monitor the amounts customers said they were going through their accounts compared to the amounts actually deposited.
mark stewardFCA Executive Director of Enforcement and Market Surveillance, said:
“The poor management of Santander’s anti-money laundering system and its inadequate attempts to address the problem created a serious and long-term risk of money laundering and financial crime.
“As part of our commitment to preventing and reducing financial crime, we will continue to take action against companies that do not have adequate anti-money laundering practices in place.”
Poor account management
In one case, a new client opened an account as a small translation business with an expected monthly deposit of £5,000. I received millions of dollars in deposits within 6 months and quickly transferred the money to another account.
The account was recommended to be closed by the bank’s own AML team in March 2014, but poor processes and structures did not allow this to be addressed until September 2015.
Santander agreed to a request by law enforcement to maintain the account in September 2015, but was unable to follow up the request. The account remained open until FCA wrote to Santander in December 2016.
of FCAMore has identified several business banking accounts that Santander has not properly managed and is at serious money laundering risk. In some cases, banks failed to quickly address “red flags” associated with suspicious activity, such as automated monitoring alerts.
“Financial crime relies on legitimate but unknowing access to financial services, which is why having trusted, automated, real-time customer (KYC) data is critical.” – Ian Henderson
These failures caused more than £298m to pass through banks before they closed the accounts.
Santander recognized significant weaknesses in its AML systems and controls. We started an improvement program in 2013 with some success. However, Santander concluded that the changes did not adequately address its underlying weaknesses: in 2017, it decided to undertake a comprehensive restructuring of its processes and systems. Santander UK continues to invest in its ongoing transformation and restoration programmes.
Santander has not contested the FCA findings and has agreed to the settlement. Without the discount, the financial penalty would be £153,990,400.
As part of their role in protecting consumers and markets, regulators have repeatedly intervened and penalized companies that have poorly managed AML systems.For example, fined Standard Chartered Bank £102.2m, HSBC Bank plc £63.9mand the investigation is NatWest fined £264.8m.
Significance of fines
Ian HendersonCEO, Kikururesponded to the news by saying:
“FCA’s £108m fine for Santander for an ‘ineffective’ anti-money laundering system underscores the high stakes and complexity of verifying customers at scale. , rely on legitimate but unknowing access to financial services, which is why reliable, automated, real-time Know Your Customer (KYC) data is so important.
“All banks and financial institutions have built substantial teams working on financial crime prevention and anti-money laundering. Not enough to protect against regulatory fines.
“Banks and financial services need to become smarter and deploy KYC systems that can reveal the true nature of every customer and supplier at scale and quickly in order to improve the efficiency and effectiveness of protection.
“This FCA fine comes at an interesting time. Banks and other regulated businesses are now between a rock and a difficult place. Received a preliminary judgment to protect the principal’s identity.While the issues surrounding this ruling have not yet been resolved, one thing is already clear: the financial services industry is committed to protecting against the growing threat of financial crime. , will increasingly rely on robust technology solutions to make better business decisions.”