Santander UK has been £107.8m after the FCA found serious and persistent gaps in its anti-money laundering (AML) controls, affecting the group’s business banking customers.

An investigation by the regulator has found that between 2012 and 2017, Santander failed to properly oversee and manage its AML systems, which significantly impacted the account oversight of more than 560,000 business customers.

The FCA described Santander’s systems as “ineffective” and said they failed to adequately verify the information provided by customers about the business they would be doing. According to the investigation, the firm also failed to properly monitor the money customers had told them would be going through their accounts compared with what actually was being deposited.

In one case, a new customer opened an account as a small translations business with expected monthly deposits of £5,000. Within six months, however, it was receiving millions in deposits and swiftly transferring the money to separate accounts. Although this account was recommended for closure by the bank’s own AML team in March 2014, poor processes and structures meant that this was not acted upon until September 2015. As a result, the customer continued to receive and transfer millions of pounds through its account.

The FCA also identified several other business banking accounts which Santander failed to manage correctly, leaving the bank open to serious money laundering risk. There were also examples of the bank failing to promptly deal with “red flags” associated with suspicious activity, such as automated monitoring alerts.

These failures led to more than £298m passing through the bank before it closed the accounts.

“Santander’s poor management of their AML systems and their inadequate attempts to address the problems created a prolonged and severe risk of money laundering and financial crime,” said executive director of enforcement and market oversight at the FCA, Mark Steward.

“As part of our commitment to prevent and reduce financial crime, we continue to take action against firms which fail to operate proper anti-money laundering controls.”

Santander knew that there were significant weaknesses in its AML systems and controls and began a programme of improvements in 2013. While these changes resulted in some improvements, the bank concluded that the changes did not adequately address the underlying weaknesses. In 2017, it decided to implement a comprehensive restructuring of its processes and systems.

Santander UK continues to invest in its ongoing transformation and remediation programme.

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