Metro Bank faces a £16m fine from the UK financial regulator for ineffective transaction monitoring systems, reflecting widespread concerns about financial security.
- The Financial Conduct Authority (FCA) imposed the fine after Metro Bank’s failure to adequately monitor over 60 million transactions for money laundering risks.
- The regulatory breach occurred between June 2016 and December 2020, following the implementation of an automated monitoring system at Metro Bank that malfunctioned.
- Junior staff at Metro Bank noticed issues with the transaction monitoring system, but the bank failed to resolve these problems until 2019.
- Although a solution was implemented in 2019, the FCA noted that Metro Bank continued to struggle with reliably monitoring transactions.
In a significant regulatory action, Metro Bank has been fined £16 million by the Financial Conduct Authority (FCA) due to shortcomings in its crime prevention systems. The fine highlights persistent issues regarding the management of financial crime risks within banking institutions.
The FCA’s investigation revealed that Metro Bank did not adequately review more than 60 million transactions, amounting to over £51 billion, for potential money laundering activities. These inadequacies were traced back to a malfunction in the bank’s automated monitoring system, which was supposed to oversee customer transactions starting from 2016.
The regulatory misstep occurred between June 2016 and December 2020. It was found that the automated system failed to track payments made on the same day that new accounts were opened, as well as subsequent transactions, until the account records were manually updated. This left a significant gap in the bank’s transaction monitoring capabilities.
The FCA pointed out that the bank’s junior employees had initially raised concerns about the system missing certain transactions. However, these issues were not addressed in a timely manner. Metro Bank attempted to remedy the situation in 2019, but the regulatory body concluded that the fixes were insufficient in ensuring all transactions were monitored correctly.
Therese Chambers, joint executive director of enforcement and market oversight, remarked, “Metro’s failings risked a gap being left in our defense against the criminal misuse of our financial system. Those failings went on for too long.” Her statement underscores the critical nature of robust anti-money laundering measures.
Metro Bank did receive a discount on its fine, reduced from an original £23.8 million, as a result of its cooperation with the FCA’s investigative processes. The incident comes at a time when regulators are heavily scrutinizing financial institutions’ efforts to combat fraud, reflecting broader industry pressures.
In the context of ongoing debates about the responsibility for financial fraud prevention, some industry players, like Revolut, have suggested that companies across various sectors should also bear the brunt of such responsibilities. This perspective points to social media platforms as significant arenas for fraudulent activities, shifting some focus away from traditional banks.
Notably, this regulatory action against Metro Bank is part of a larger crackdown by the FCA, as seen in recent convictions of individuals involved in a £1.5 million crypto investment scam. These actions underline the regulator’s commitment to maintaining financial integrity across the sector.
Metro Bank’s case underscores the ongoing challenges banks face in effectively combating financial crime within a regulatory framework.
