The UK's Financial Conduct Authority (FCA) has imposed a £42 million fine on Barclays due to multiple failures in managing money laundering risks. This penalty follows the discovery of significant deficiencies in the bank's control systems.
WealthTek Case
Barclays found itself at the center of a scandal involving WealthTek, a now-defunct wealth management firm that was the subject of a criminal investigation. The bank opened a client account for WealthTek despite the firm lacking FCA permission to handle client funds.
Barclays has agreed to repay £6.3 million to WealthTek clients who are still missing their money.
Stunt & Co Case
The second case involves Stunt & Co, a company run by James Stunt, the former son-in-law of Bernie Ecclestone. The FCA pointed out that Barclays provided services to the firm while failing to properly assess its risk profile. From 2015 to 2020, Stunt & Co received £46.8 million from Fowler Oldfield, which prosecutors later characterized as a major money laundering operation.
Despite police raids on Stunt & Co and Fowler Oldfield in 2016, Barclays did not reclassify Stunt's accounts as higher risk until years later.
Consequences and Barclays' Response
The regulator noted that the bank's failures "facilitated the movement of funds linked to financial crime." This is the third fine imposed on Barclays by the FCA in a decade for shortcomings in financial crime controls. Previous fines included £72 million in 2015 and £1.8 million in 2022 related to different cases.
In response to the fine, Barclays stated that it fully cooperated with the regulator and continues to invest in strengthening its financial crime controls. The bank also emphasized that the Stunt case is "historical" and insisted that no breaches of anti-money laundering rules were found.
The fine against Barclays highlights the ongoing challenges of compliance with anti-money laundering laws in the financial sector. The attention of regulators to such violations, as evidenced by these two high-profile cases, should drive banks to adhere more strictly to regulations and improve risk management controls.
