Metro Bank hit with £16.7m fine over money laundering control failures

The Financial Conduct Authority (FCA) has fined Metro Bank £16.7 million for failing to properly monitor billions of pounds worth of transactions for potential money laundering risks over a four-and-a-half-year period.

The UK financial watchdog found that between June 2016 and December 2020, the bank failed to adequately monitor over 60 million transactions valued at more than £51 billion, after implementing a new automated monitoring system that did not function as intended.

The system's critical flaw meant that transactions taking place on the same day an account was opened, and subsequent transactions until the account record was updated, went completely unchecked. Despite junior staff raising concerns about unmonitored transaction data in 2017 and 2018, the issues were not properly identified and addressed.

The regulator noted that even once the issue had been fixed in July 2019, Metro did not have a mechanism to consistently check that all relevant transactions were being fed into the monitoring system until December 2020.

"Metro's failings risked a gap being left in our defence against the criminal misuse of our financial system," said Therese Chambers, joint executive director of enforcement and market oversight at the FCA. "Those failings went on for too long."

The fine would have been £23.8 million, but Metro Bank received a 30 per cent discount for agreeing to resolve the matter early with the regulator, the FCA said..

Metro Bank's chief executive officer Daniel Frumkin acknowledged the issues, stating: "The conclusion of these enquiries draws a line under this legacy issue, allowing the bank to move forward and fully focus on the future."

The bank, which was rescued in a recapitalisation deal last year, has since implemented new processes to address the identified problems. In a trading update, Metro Bank confirmed it still expects to meet its performance forecasts for the year, highlighting its ongoing shift towards specialist mortgages and commercial lending.

The news impacted Metro Bank's share price, which fell 3 per cent when markets opened, though shares remain up 128 per cent year-to-date as the bank continues its turnaround efforts.



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