Barclays hit with record £72m fine for anti-financial crime failures
- Credit: PA
Banking giant Barclays has been fined £72million by the City watchdog for failing to handle potential financial crime risks relating to a £1.88billion transaction for ultra high-net-worth clients.
The penalty is the largest ever imposed by UK regulators for financial crime failings.
The Financial Conduct Authority (FCA) said the clients were “politically exposed persons” and should have been subject to extra checks and monitoring. It found that, in fact, Barclays used a lower level of due diligence and did not follow standard policies, accusing the bank of seeking to take on the clients as quickly as possible to make £52.3million in revenues.
Although the FCA acknowledged that the deal, arranged and completed in 2011 and 2012, did not involve any financial crime, it said the nature of the transaction and the people involved should have flagged up the need for extra checks.
It added that the bank went to “unacceptable lengths to accommodate the clients”, failing to ask for key information as it “did not wish to inconvenience” them.
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Barclays agreed to keep details of the transaction under wraps even within the firm, agreeing to a clause that would see the clients paid £37.7m if they failed to comply with the confidentiality agreement. The bank did not keep records of its due diligence relating to the transaction on any of its systems, instead keeping only hard copies in a safe bought specifically for the purpose, with few people aware of their existence or location.
The fine levied comprises the £52.3m in revenue it made from handling the transaction and an additional £19.8m penalty. This was reduced by 30% as a result of Barclays’ co-operation with the inquiry, without which its would have paid £80.5m.
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Mark Steward, director of enforcement and market oversight at the FCA, said: “Barclays ignored its own process designed to safeguard against the risk of financial crime and overlooked obvious red flags.”
He added: “Firms will be held to account if they fail to minimise financial crime risks appropriately.”
Barclays stressed that the FCA had made no finding of financial crime relating to the transaction or the clients.
It added: “Barclays has co-operated fully with the FCA throughout and continues to apply significant resources and training to ensure compliance with all legal and regulatory requirements.”