top of page
Search
Flexi Group

FCA Fines Metro Bank £16 Million for Failing Anti-Money Laundering Controls

The UK’s Financial Conduct Authority (FCA) announced today that Metro Bank has been fined £16 million ($20.51 million) for deficiencies in its anti-money laundering (AML) controls from June 2016 through December 2020. According to the FCA, the bank failed to establish adequate systems and controls to effectively monitor more than 60 million transactions, totaling over £51 billion, for potential money laundering risks.


FCA Fines Metro Bank £16 Million for Failing Anti-Money Laundering Controls

The FCA confirmed that Metro Bank has since implemented remediation processes to address the flaws. Founded in 2010 with the goal of challenging traditional UK banks, Metro Bank has faced mounting struggles in recent years, leading to a rescue agreement last October. The bank, however, has shown some progress in recovery, forecasting a return to profit in the fourth quarter.


This penalty signals the FCA’s increased scrutiny of the UK’s “challenger banks,” which are newly established digital lenders seeking to capture market share from traditional high street banks. Just last month, the FCA fined Starling Bank £29 million, citing its “shockingly lax” AML protocols.


In early trading today, Metro Bank’s shares dropped 3%, while the FTSE 100 index declined by just 0.5%. However, Metro’s shares remain up 128% for the year as its turnaround efforts continue to yield positive signs.


In a statement, Therese Chambers, joint executive director of enforcement and market oversight, commented, “Metro’s failings risked a gap being left in our defence against the criminal misuse of our financial system. Those failings went on for too long.”


The FCA noted that Metro Bank automated its transaction monitoring systems in 2016, but the system malfunctioned, leaving same-day transactions unmonitored on the day an account was opened. The FCA also stated that although junior staff flagged concerns in 2017 and 2018 about certain transaction data going unmonitored, these warnings did not prompt a resolution. A fix was eventually implemented in July 2019, but the transaction monitoring system continued to exhibit critical issues until December 2020.


As a result, Metro Bank failed to monitor over 60 million customer transactions across more than four years. This unmonitored activity accounted for 6% of the bank’s total transactions, with a combined transaction value of slightly over £51 billion.


Metro Bank initially faced a potential fine of nearly £24 million for these lapses, but the amount was reduced by 30% after the bank agreed to work with the FCA to resolve the issues.


Cyprus Company Formation

In a separate statement, Metro Bank CEO Daniel Frumkin remarked, “The conclusion of these enquiries 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.”


Despite its customer-focused services and distinct physical branches, Metro Bank has encountered substantial setbacks in recent years. The bank’s stock price plummeted following a significant accounting error in 2019, and its challenges deepened last year when regulators rejected a proposal that would have decreased the capital requirement for its mortgage assets, raising concerns about the bank’s profitability.


Approximately one year ago, Metro Bank launched a strategic overhaul that included a £102 million ($131 million) capital infusion, making Colombian billionaire Jaime Gilinski Bacal the bank’s largest shareholder. This plan also entailed a 20% reduction in its workforce and greater investment in digital transformation.


Metro Bank reported in a third-quarter trading update that it remains on track to meet its annual performance targets. CEO Frumkin also indicated that the bank has been shifting its focus toward higher-yielding specialist mortgages and commercial lending.

By fLEXI tEAM


Comments


bottom of page