The U.K.’s Financial Conduct Authority (FCA) sanctioned the Nationwide Building Society for failings in its controls and processes for guarding against financial crime.
The regulator imposed a £44 million fine on the firm for inadequate anti-financial crime systems and controls between October 2016 and July 2021.
“During this period, Nationwide had ineffective systems for keeping up-to-date due diligence and risk assessments for all its personal current account customers and for monitoring their transactions,” the regulator said.
Additionally, it noted that, during the period, some of Nationwide’s customers used their personal accounts for business activity — at a time when the firm didn’t provide business current accounts, and didn’t have proper controls to manage financial crime risks in these kinds of accounts.
“This meant Nationwide was unable to effectively identify, assess, monitor or manage the money laundering risks among its personal current account customers. It also meant Nationwide did not have an accurate picture of its customers who presented a higher risk of financial crime,” the regulator said.
“Nationwide failed to get a proper grip of the financial crime risks lurking within its customer base. It took too long to address its flawed systems and weak controls, meaning red flags were missed with serious consequences,” said Therese Chambers, joint executive director of enforcement and market oversight at the FCA, in a release.
Starting in mid-2021, Nationwide undertook a major effort to beef up its anti-crime controls and processes, the regulator noted. The firm also agreed to settle the case, qualifying for a 30% discount on its penalty, which would otherwise have been £63 million, the FCA said.
In a statement, Nationwide said that it identified these weaknesses through its own reviews, “and voluntarily brought them to the attention of the FCA.”
It also said that it fully cooperated with the FCA’s investigation, and that it has taken action to beef up its controls.
“Since 2021, Nationwide has invested significantly in all aspects of its economic crime control framework in order to ensure our systems are robust,” it said. “We do not believe that these controls issues caused financial loss to any of our customers and remain committed to preventing economic crime and protecting our customers and the wider U.K. economy from fraud.”