London (Parliament Politics Magazine) – UK’s financial watchdog fined Metro Bank nearly £17m for failings in its money-laundering rules over four years.
The Financial Conduct Authority (FCA) administered the £16.7m penalty after finding losses in monitoring 60m transactions over a four-year period that threatened a “gap being left in the defence against the criminal use of the financial system”. Concerns persisted despite being presented by junior employees three years before they were fully resolved, the regulator said.
Metro stated it accepted the FCA’s findings and had since fixed the monitoring system failings and enhanced its operations. The challenger bank, which has 76 chapters and 2.7 million customers, was founded in the UK in 2010 as the first high-street bank to unlock in more than 100 years. From June 2016, Metro automated the monitoring of customer transactions for potential financial offences.
How did Metro Bank’s failings lead to a £17m fine?
It was uncovered that there were fallacies in how data was fed into the system which meant transactions that took place on the day an account was opened, and some further activities were not observed. Despite junior staff members presenting concerns in 2017 and 2018, the bank left it until 2019 to take steps but this fix still failed to adequately monitor all transactions. It was not until December 2020, four-and-a-half years after the system was launched, that Metro was able to consistently check all transactions. During that period, it is estimated that transactions with a value of £51bn were not monitored for money-laundering risks during the incident.
What were the penalties for Metro Bank’s former executives?
In December 2022, the FCA penalized the bank and two of its ex-executives more than £10m for deceptive investors during the incident. Metro paid £10m, while the ex-chief executive Craig Donaldson and former chief financial officer David Arden were given fines of £223,100 and £134,600 respectively. Donaldson and Arden appealed against the penalties.
Remarking on the FCA fine, Daniel Frumkin, the chief executive of Metro Bank, stated: “The conclusion of these inquiries draws a line under this legacy issue, allowing the bank to move forward and fully focus on the future, building on the solid foundations it has already laid. We are continuing, at pace, our shift towards higher-yielding specialist mortgages and commercial, corporate and SME lending with a strong pipeline of business.”