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.
