Nationwide fined £44m for financial crime control failures

(Sharecast News) - Nationwide has been slapped with a £44m fine by the UK's financial regulator for financial crime prevention failures from October 2016 to July 2021. The Financial Conduct Authority said the building society did not have adequate systems for keeping up-to-date due diligence and risk assessments for all personal current account customers and for monitoring their transactions.

Nationwide was also aware that some of those customers were using their personal accounts for business activity, in breach of its terms, the FCA added.

As Nationwide did not at the time offer business current accounts the correct processes to manage potential financial crime risks were not in place.

"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.

"Building societies and banks have a key role in the fight against financial crime. Firms must remain vigilant in this fight."

In one serious case, Nationwide missed opportunities to identify a customer using personal current accounts to receive fraudulent Covid furlough payments. The customer received 24 payments totalling £27.3m over 13 months, with £26.01m of this deposited over eight days.

The Revenue & Customs department recovered £26.5m, but approximately £800,000 remains outstanding.

Nationwide faced a potential penalty of nearly £63m but received a 30% reduction under the FCA's settlement procedures after agreeing to resolve the case.

Reporting by Frank Prenesti for Sharecast.com