UK financial regulators have imposed a hefty £42 million ($56 million) fine on Barclays Plc for significant failures in identifying and managing financial crime risks related to two of its clients.
The Financial Conduct Authority (FCA) detailed the lapses in a statement on Wednesday, highlighting how the banking giant facilitated the movement of funds linked to criminal activity.
The majority of the fine is directly linked to Barclays’ inadequate management of money laundering risks associated with a client named Stunt & Co.
According to the FCA’s statement, over the course of a year, Stunt & Co. received a substantial £46.8 million from Fowler Oldfield, a company that was later found to be at the heart of one of the United Kingdom’s largest-ever money-laundering trials.
The regulator’s findings were damning. The FCA stated that “Barclays failed to properly consider the money laundering risks associated with the firm even after receiving information from law enforcement about suspected money laundering through Fowler Oldfield, and after learning that the police had raided both firms.”
The watchdog concluded that “by providing ongoing banking services to Stunt & Co, Barclays facilitated the movement of funds linked to financial crime,” a severe breach of its regulatory obligations.
Lapses in due diligence: the WealthTek account
In a separate instance, Barclays was found to have failed in its due diligence when opening a money account for another client, WealthTek.
The FCA noted that Barclays failed to properly gather sufficient information about WealthTek before onboarding the company. Crucially, WealthTek was not permitted by the FCA to hold client money at the time Barclays provided it with the account.
The regulator pointed out that a basic but critical step was missed. “One simple check it could have done was to look at the Financial Services Register before opening the account,” the FCA said.
Without the right information about WealthTek and how the account would be used, there was an increased risk of misappropriation of client money or money laundering.
Barclays’ response
In an effort to mitigate the harm caused, Barclays has agreed to make a voluntary payment of £6.3 million to the clients of WealthTek who have experienced a shortfall in the money they have been able to reclaim from the now-defunct firm.
This proactive step, according to the FCA’s statement, helped Barclays secure a reduction in the ultimate fine it faced from the regulator.
In response to the fine, a spokesperson for Barclays stated that the bank “remains deeply committed to the fight against financial crime and fraud,” adding that the issues were all centered around historical money laundering activity.
The representative affirmed that the lender “fully cooperated with both investigations and has further strengthened its financial crime and other control capabilities.”
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