Metro Bank has been fined £16m by the Financial Conduct Authority (FCA).
- The fine is due to inadequate monitoring of over 60 million transactions, valued at £51bn, for money laundering risks.
- Issues stemmed from an automated system failure that went unnoticed between 2016 and 2019.
- A fix was implemented in 2019, but problems persisted in transaction monitoring.
- Other financial institutions face similar pressures to improve fraud prevention measures.
The Financial Conduct Authority (FCA) has fined Metro Bank £16 million due to its inability to adequately monitor a significant number of transactions for money laundering risks. This penalty arises from failures occurring over a period from June 2016 to December 2020, during which more than 60 million transactions, amounting to over £51 billion, were not properly scrutinised.
The root of the problem began in 2016 when Metro Bank transitioned to an automated system for transaction monitoring, which proved ineffective. An error related to data input meant the new system could not monitor same-day transactions and subsequent payments effectively until the account record update. Despite junior staff raising concerns, the bank struggled to identify and address the issue promptly.
In an attempt to resolve the shortcoming, Metro Bank applied a corrective measure in 2019. However, the FCA noted that even post-fix, Metro Bank was unable to reliably verify that all relevant transactions were being monitored by the system. This continued oversight risked leaving vulnerable gaps in the defence against the misuse of the financial system, as highlighted by Therese Chambers, the joint executive director of enforcement and market oversight at the FCA.
Acknowledging its fault and cooperating with the FCA’s procedures, Metro Bank secured a reduced fine from the initially suggested £23.8 million. The incident occurs in a climate of mounting demands from regulators and the public for heightened fraud prevention measures within the financial sector.
Banks like Revolut have echoed these concerns, advocating for a reassessment of the responsibilities of companies outside the finance sector in combatting fraud. The argument suggests that platforms run by social media giants are facilitating the majority of fraudulent activities, indicating a broader issue beyond traditional banking institutions.
The ongoing challenges faced by Metro Bank illustrate the critical importance of robust transaction monitoring systems in the financial industry.
