FCA fines Nationwide £44m for anti-financial crime control failings

The UK Financial Conduct Authority (FCA) has fined Nationwide Building Society £44 million for inadequate anti-financial crime systems and controls between October 2016 and July 2021.

According to the FCA, Nationwide’s controls were ineffective in two core areas affecting personal current account customers: (1) maintaining up-to-date due diligence and risk assessments across its customer base, and (2) monitoring transactions effectively. The FCA’s assessment is that these weaknesses meant Nationwide could not reliably identify, assess, monitor, or manage money laundering risks among personal current account customers, and it did not have an accurate view of which customers presented higher financial crime risk. 

The FCA also highlights a specific structural issue: Nationwide was aware that some customers were using personal current accounts for business activity, contrary to its terms. At the time, Nationwide did not offer business current accounts, and the FCA states it therefore did not have the appropriate processes in place to manage the financial crime risks arising from business activity occurring through personal accounts. 

A serious example cited by the FCA involved fraudulent Covid furlough payments. Nationwide missed opportunities to identify a customer using personal current accounts to receive fraudulent payments: the customer reportedly received 24 payments totalling £27.3m over 13 months, with £26.01m deposited over 8 days. His Majesty’s Revenue & Customs recovered £26.5m, but around £800,000 remained unrecovered. 

In its enforcement statement, the FCA said Nationwide took too long to address known weaknesses in its systems and controls, resulting in missed red flags and serious consequences. The FCA notes that Nationwide later began a large-scale financial crime transformation programme in July 2021. 

The FCA states that Nationwide would have been fined £62,969,297 but received a 30% discount for resolving the matter, resulting in a total financial penalty of £44,078,500. The FCA also notes that since 2021, it has imposed 13 fines totalling £300,767,526 on banks for AML systems and controls failings. 

Source: FCA fines Nationwide £44m for failings in financial crime controls | FCA