Nationwide fined £44m by watchdog for financial crime control failings | Nationwide
Across the country, it was fined £44 million by the City watchdog for “weak” financial crime controls that resulted in a serious case of Covid fraud that left UK taxpayers £800,000 out of pocket.
The Financial Conduct Authority (FCA) has fined the construction industry for failures spanning nearly five years. He said the lender was aware that some customers were using personal accounts for commercial activities in violation of its terms.
The FCA said it does not offer business accounts at this point nationwide and therefore does not have the right processes in place to monitor potential financial crime risks.
The practice resulted in a situation where Nationwide failed to catch a customer who had received 24 fraudulent Covid furlough payments totaling £27.3 million over 13 months using personal current accounts. Approximately £26 million of this sum was deposited in just eight days.
Although HM Revenue and Customs managed to recover £26.5 million from the fraudsters, around £800,000 remains unrecovered, leaving taxpayers out of pocket due to Nationwide’s failings.
Therese Chambers, the FCA’s joint director of enforcement and market surveillance, said: “Across the country, it failed to properly grasp the financial crime risks lurking within its customer base. It took too long to address its flawed systems and weak controls, which meant red flags with serious consequences were missed.
“Construction cooperatives and banks play a key role in the fight against financial crimes. Companies need to be vigilant in this fight.”
The failures occurred between October 2016 and July 2021, and while Nationwide sought to make improvements, the FCA said it “failed to adequately address these weaknesses in a timely manner”. It was then forced to undertake a large-scale financial crime transformation program in July 2021.
“We regret that our controls during the period fell below the high standards we expected,” Nationwide said in a statement.
A spokesman for Nationwide building society said it had identified the issues through its own investigations, voluntarily brought the matter to the FCA’s attention and was “fully co-operating” with the regulator’s investigation.
“Since 2021 Nationwide has made significant investments in all aspects of its economic crime control framework to ensure our systems are robust,” they added.
“We do not believe these control issues have caused financial loss to any of our customers and we are committed to preventing economic crime and protecting our customers and the wider UK economy from fraud.”
