Bank penalized with a £16.7 million fine due to shortcomings in combating financial crimes
Metro Bank, a UK-based bank known for offering some of the best savings rates this year, has been fined £23.8 million by the Financial Conduct Authority (FCA) for failing to meet anti-money laundering (AML) requirements. The fine, originally £16.7 million, was reduced by 30% after the bank cooperated with the investigation.
The FCA's investigation, which took place between June 2016 and December 2020, found that Metro Bank had inadequate systems and controls to meet AML requirements. Specifically, the bank's automated transaction monitoring system (ATMS) did not function correctly, leading to transactions not being monitored. Transactions taking place on the same day an account was opened and any further transactions until the account record was updated were not scrutinised.
Junior staff raised concerns about some transaction data not being monitored in 2017 and 2018, but no action was taken. Even after a fix was implemented in July 2019, Metro Bank did not have a mechanism to consistently check that all relevant transactions were being recorded properly until December 2020.
The FCA's joint executive director of enforcement and market oversight, Therese Chambers, stated that Metro's failings risked a gap being left in the defence against the criminal misuse of the financial system.
Daniel Frumkin, CEO of Metro Bank, stated that the conclusion of these enquiries draws a line under the "legacy issue". He added that this reflects "significant progress" in delivering on the bank's strategic priorities.
Under FCA rules, banks are required to have AML systems in place to check customer accounts and ensure money isn't being used for illegal or suspicious purposes. Banks must implement risk-based AML policies and controls, conduct thorough customer due diligence and ongoing monitoring, train staff, and perform independent evaluations of AML programs. Maintaining vigilance on all customer accounts for suspicious activity is mandated to meet these obligations.
Metro Bank is shifting towards higher yielding specialist mortgages and commercial, corporate, and SME lending. The bank has fixed the errors in its transaction monitoring system that were identified in 2019. However, it has axed fee-free debit card transactions in Europe.
Despite the fine, Metro Bank released a third-quarter trading update, stating it was profitable on an underlying basis. The bank's total net loans as of 30 September 2024 were £9.1 billion, a 22% decrease since June 2024, due to the completion of a £2.5 billion mortgage portfolio disposal.
This incident underscores the importance of robust AML systems for banks. The FCA enforces these obligations strictly with heavy penalties for non-compliance. Banks must ensure they have effective AML controls in place to prevent financial crime.
- Banks, such as Metro Bank, are mandated to maintain vigilance on all customer accounts for suspicious activity to meet anti-money laundering (AML) obligations, as enforced by the Financial Conduct Authority (FCA).
- Metro Bank, in addition to offering competitive savings rates, was fined £23.8 million for failing to meet AML requirements, underscoring the importance of robust AML systems in the banking-and-insurance industry and personal-finance sector.
- Banks like Metro Bank must implement risk-based AML policies and controls, conduct thorough customer due diligence and ongoing monitoring, train staff, and perform independent evaluations of AML programs to ensure money isn't being used for illegal or suspicious purposes, as outlined in FCA rules.
