Metro Bank’s £51bn Blind Spot Leads to 3rd Largest FCA Fine of 2024

The
Financial Conduct Authority (FCA) has imposed a £16.7 million fine on Metro
Bank for significant failings in its anti-money laundering controls that left
over £51 billion in transactions inadequately monitored over a four-year
period.

Metro Bank Hit With £16.7m
Fine Over AML Control Failures

The
regulatory action follows an investigation that revealed Metro Bank failed to
properly monitor more than 60 million transactions between June 2016 and
December 2020 due to fundamental flaws in its automated transaction monitoring
system.

The
investigation uncovered a critical error in the bank’s data processing that
prevented the monitoring of transactions made on the same day accounts were
opened. This technical flaw, known internally as the “Time Stamp Code
Logic Error,” went undetected for nearly three years despite early
warnings from junior staff members.

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

The
problems began when Metro Bank implemented its Automated Transaction Monitoring
System in June 2016. A coding error meant that when customers opened accounts
and conducted transactions on the same day, the system failed to capture these
activities for monitoring. The issue persisted until July 2019, when a partial
fix was implemented.

The Fine Could Be Higher

Even after
identifying the problem, Metro Bank did not establish consistent verification
procedures to ensure all transactions were being properly monitored until
December 2020, more than four years after the system’s initial implementation.

Internal
documents reveal that junior staff members raised concerns about data
monitoring gaps in 2017 and 2018, but their warnings failed to prompt adequate
investigation or remediation by senior management. The issue was notably
removed from the minutes of a January 2018 Financial Crime Steering Group
meeting, effectively burying the warning signs.

The fine
would have been £23.8 million, but Metro Bank received a 30% discount for
agreeing to resolve the matter early. The bank has since implemented new
processes to address the identified issues and strengthen its financial crime
controls.

Despite the
“discount,” the fine imposed on Metro Bank is among the highest in
2024. Only Starling Bank received a higher penalty in September, nearly £29
million, and Citigroup in May, £28 million.

The
Financial Conduct Authority (FCA) has imposed a £16.7 million fine on Metro
Bank for significant failings in its anti-money laundering controls that left
over £51 billion in transactions inadequately monitored over a four-year
period.

Metro Bank Hit With £16.7m
Fine Over AML Control Failures

The
regulatory action follows an investigation that revealed Metro Bank failed to
properly monitor more than 60 million transactions between June 2016 and
December 2020 due to fundamental flaws in its automated transaction monitoring
system.

The
investigation uncovered a critical error in the bank’s data processing that
prevented the monitoring of transactions made on the same day accounts were
opened. This technical flaw, known internally as the “Time Stamp Code
Logic Error,” went undetected for nearly three years despite early
warnings from junior staff members.

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

The
problems began when Metro Bank implemented its Automated Transaction Monitoring
System in June 2016. A coding error meant that when customers opened accounts
and conducted transactions on the same day, the system failed to capture these
activities for monitoring. The issue persisted until July 2019, when a partial
fix was implemented.

The Fine Could Be Higher

Even after
identifying the problem, Metro Bank did not establish consistent verification
procedures to ensure all transactions were being properly monitored until
December 2020, more than four years after the system’s initial implementation.

Internal
documents reveal that junior staff members raised concerns about data
monitoring gaps in 2017 and 2018, but their warnings failed to prompt adequate
investigation or remediation by senior management. The issue was notably
removed from the minutes of a January 2018 Financial Crime Steering Group
meeting, effectively burying the warning signs.

The fine
would have been £23.8 million, but Metro Bank received a 30% discount for
agreeing to resolve the matter early. The bank has since implemented new
processes to address the identified issues and strengthen its financial crime
controls.

Despite the
“discount,” the fine imposed on Metro Bank is among the highest in
2024. Only Starling Bank received a higher penalty in September, nearly £29
million, and Citigroup in May, £28 million.

This post is originally published on FINANCEMAGNATES.

  • Related Posts

    Zenfinex Partners with Your Bourse to Enhance Liquidity Services for Brokers

    London-based brokerage firm Zenfinex collaborated with Your Bourse, a technology provider offering risk management services. This collaboration aims to enhance trading services by integrating better technology. The company will reportedly…

    Dutch Regulator Investigates Vantage for Illegal CFD Offering

    The Netherlands’ Authority for the Financial Markets (AFM) has opened an investigation against Vantage Markets, a contracts for differences (CFDs) broker, and has also issued a penalty order for non-cooperation.…

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    You Missed

    Oil prices ease on fears of higher output, sluggish demand

    • November 14, 2024
    Oil prices ease on fears of higher output, sluggish demand

    Asia FX weak as dollar surges to 1-year high on sticky inflation; Powell awaited

    • November 14, 2024
    Asia FX weak as dollar surges to 1-year high on sticky inflation; Powell awaited

    Oil prices muted after mixed US inventory data; more demand cues awaited

    • November 14, 2024
    Oil prices muted after mixed US inventory data; more demand cues awaited

    Oil prices edge down, forecasts for higher oil output, weak demand growth weigh

    • November 14, 2024
    Oil prices edge down, forecasts for higher oil output, weak demand growth weigh

    Japan planning $87 billion extra budget to fund stimulus package, paper says

    • November 13, 2024
    Japan planning $87 billion extra budget to fund stimulus package, paper says

    Oil rebounds slightly on short-covering as strong dollar caps gains

    • November 13, 2024
    Oil rebounds slightly on short-covering as strong dollar caps gains