FCA fines Barclays £42m over financial crime risk lapses

(Sharecast News) - The Financial Conduct Authority has fined Barclays a total of £42m, it announced on Wednesday, for significant lapses in its handling of financial crime risks, following two separate failings linked to client accounts associated with suspected fraud and money laundering. Barclays Bank UK was fined £2.1m for shortcomings in its due diligence processes when opening an account for WealthTek, a now-collapsed wealth management firm.

The FCA found that Barclays failed to confirm whether WealthTek was authorised to hold client money, a step that could have been addressed by consulting the Financial Services Register.

Despite this oversight, £34m was deposited by clients into the account.

Barclays had agreed to make a voluntary payment of £6.3m to affected clients of WealthTek, many of whom had been unable to recover their funds.

The FCA charged WealthTek's principal partner in December with multiple criminal offences, including money laundering and fraud.

In a separate case, Barclays Bank was fined £39.3m for failing to properly assess and monitor the money laundering risks associated with its relationship with Stunt & Co.

Over a 13-month period, Stunt & Co received £46.8m from Fowler Oldfield, a gold dealer at the centre of a major money laundering scheme.

Barclays continued to provide banking services to Stunt & Co despite warnings from law enforcement, including police raids on both firms.

It did not undertake a review of its exposure to Fowler Oldfield until the FCA moved to prosecute NatWest over its own involvement with the operation.

"The consequences of poor financial crime controls are very real - they allow criminals to launder the proceeds of their crimes, and they allow fraudsters to defraud consumers," said Therese Chambers, joint executive director of enforcement and market oversight at the FCA.

"Banks need to take responsibility and act promptly, particularly when obvious risks are brought to their attention."

She added that Barclays had secured a reduced penalty in the WealthTek case due to its co-operation and voluntary restitution to consumers.

Barclays was continuing to implement a significant remediation programme to strengthen its anti-money laundering systems, the FCA said.

Financial crime remains a supervisory priority for the FCA, which added that it was actively monitoring retail banks to ensure compliance and improved standards across the sector.

At 0845 BST, shares in Barclays were flat at 343.35p.

Reporting by Josh White for Sharecast.com.