Barclays, one of the UK’s biggest banks, has been hit with a huge £42 million fine by the Financial Conduct Authority (FCA), the country’s financial watchdog. The fine comes after the bank failed to properly check for signs of money laundering on two separate occasions.
Money laundering is when people try to hide the source of illegally gained money, and banks have a key role in stopping this. In this case, Barclays was found to have ignored warning signs and failed to carry out basic checks.
According to the FCA, Barclays allowed companies to open and use accounts without doing enough checks to confirm whether they were allowed to handle money for other people. This kind of mistake can help criminals move dirty money around the financial system.
The FCA said Barclays showed serious weaknesses in how it managed financial crime risks. These issues were found during two different incidents that raised major concerns for the regulator.
Mistakes Involving WealthTek and Stunt & Co
The first major failure involved a company called WealthTek. Barclays opened a client money account for this firm. But the FCA said that Barclays should never have done this, as WealthTek was not allowed to hold client money.
This mistake could have been avoided with just a simple check. If Barclays had looked at the Financial Services Register — a public list that shows what firms are allowed to do — it would have seen that WealthTek was not approved to hold money for clients. But the bank failed to do so.
WealthTek was later shut down because of serious regulatory and operational problems. As a result, some clients lost money. Now, Barclays has agreed to pay £6.3 million to those affected, as many of them have not been able to get all their money back.
The second incident involved another company called Stunt & Co. Barclays allowed them to use its banking services, even though there were clear risks. This firm went on to receive nearly £47 million from another business, Fowler Oldfield, which was part of a major money laundering scheme.
Despite getting warnings from law enforcement about suspected criminal activity involving both companies, and even after police raids, Barclays continued to provide services. The FCA said this was a serious failure in understanding and acting on money laundering risks.
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Regulator Says Barclays Is Working on Fixes
The FCA pointed out that Barclays is now making efforts to fix the problems. The bank is taking part in what the regulator called a “significant remediation programme.” This means Barclays is reviewing and changing how it checks for financial crimes and handles risky customers.
The regulator said these changes are important to help stop future problems, but the fine was necessary to hold Barclays accountable for past mistakes. These failures could have helped criminals move large amounts of money without being detected.
Barclays has accepted the fine and the findings. The bank has also agreed to improve its systems and controls to prevent similar issues in the future. The FCA did not accuse any individuals, but focused on the company’s overall handling of financial crime risks.
This case is one of the largest fines for anti-money laundering failures in recent years. It highlights how important it is for banks to follow rules closely and stay alert to suspicious activity. Financial firms are expected to protect their customers and the financial system from harm.
The FCA continues to monitor and take action against banks and financial firms that fall short in these responsibilities.