Nationwide handed £44m FCA tremendous for monetary crime failures over a 4 yr interval

Nationwide Building Society has been fined £44million by the Financial Conduct Authority for ‘failing to get a grip on’ financial crime risks lurking within its customer base’ over a four year period. 

The FCA found Nationwide lacked suitable systems for keeping up-to-date due diligence and risk assessments for all its personal current account customers and for monitoring their transactions. 

The failings occurred between October 2016 and July 2021.

Britain’s biggest building society was aware at the time some customers were using their personal accounts for business activity, in breach of its terms, the FCA found. 

Nationwide did not offer business current accounts, so did not have the right processes in place to manage the financial crime risks from business account activity.

This meant Nationwide was unable to identify and keep track of money laundering risks among its personal current account customers, the FCA says.

It also meant Nationwide did not have an accurate picture of its customers who has a higher risk of financial crime.

Nationwide has been slapped with a £44m fine for failing to control financial crime within its customer base

Nationwide said it identified the issues itself and voluntarily brought them to the attention of the FCA. 

In one case, Nationwide missed opportunities to identify a customer using personal current accounts to receive fraudulent Covid furlough payments. 

The customer received 24 payments totalling £27.3million over a period of 13 months, with £26.01million of this deposited over eight days. 

HM Revenue & Customs (HMRC) recovered £26.5million, but approximately £800,000 remains unrecovered. 

Therese Chambers, of the FCA, said: ‘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.

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

Nationwide would have faced a fine of £62.9million but it agreed to resolve the issues and so qualified for a 30 per cent discount under the FCA’s processes. The total fine is £44million. 

A Nationwide Building Society spokesman says: ‘Nationwide identified these issues, which relate to controls in place before July 2021, through its own reviews, and voluntarily brought them to the attention of the FCA. 

‘The Society cooperated fully with the FCA investigation, and we are sorry that our controls during the period fell below the high standards we expect.

‘Since 2021, Nationwide has invested significantly in all aspects of its economic crime control framework in order to ensure our systems are robust.

‘We do not believe that these controls issues caused financial loss to any of our customers and remain committed to preventing economic crime and protecting our customers and the wider UK economy from fraud.’