The fine relates to the period between October 2016 and July 2021, where Nationwide had “ineffective systems” for keeping up to date with due diligence and risk assessments for its personal current account customers and monitoring their transactions.
The FCA said this meant Nationwide was unable to effectively identify, assess, monitor or manage the money laundering risks among its personal current account customers. It also meant the mutual did not have a true picture of the customers who may have presented a higher risk of financial crime.
In one instance, Nationwide missed opportunities to identify a customer who was using personal current accounts to receive fraudulent Covid-19 furlough payments.
The customer received 24 payments totalling £27.3m over a 13-month period, with £26.01m of this deposited over eight days. Some £26.5m was recovered by HMRC, but around £800,000 has not been recovered.
Nationwide knew of its shortcomings in its systems and controls and made improvements. However, the regulator said this was not addressed in a timely manner.
Aldermore Insights with Jon Cooper: Edition 5 – Feeling enthusiastic about next year’s run-of-the-mill market
Sponsored by Aldermore
The mutual later underwent a large-scale financial crime transformation programme in July 2021.
Therese Chambers, joint executive director of enforcement and market oversight at 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.”
