December 2, 2015

Regulator imposes substantial fine on High Street Bank

The Financial Conduct Authority (FCA) imposed the penalty on Barclays Bank, following fears that a £1.88 million deal which Barclays was involved with a number of its customers raised the risk of bribery and that the institution was being used for money laundering or even to finance terrorism.

A subsequent investigation found that Barclays – who stood to make a substantial profit from the arrangement – had failed to carry out adequate checks on the clients and had in fact breached its own controls set up to counter the risks of financial crime.

Amongst the reasons for the fine the FCA cited that Barclays had failed to conduct due diligence on its customers, because staff wanted to complete the deal quickly. In addition, senior staff had gone to great lengths to keep the identity of the clients secret; documents were kept in a safe that few employees knew about and details were not uploaded to the bank’s computer system.

Mark Steward, the FCA’s director of enforcement and market oversight, said: “Barclays ignored its own process designed to safeguard against the risk of financial crime and overlooked obvious red flags to win new business and generate significant revenue. This is wholly unacceptable.”

A Barclays spokesman said: “The FCA made no finding that Barclays facilitated any financial crime in relation to the transaction or the clients on whose behalf it was executed.
“Barclays has co-operated fully with the FCA throughout and continues to apply significant resources and training to ensure compliance with all legal and regulatory requirements.”

The decision confirms the importance of carrying out due diligence on business partners and clients, as failure to do so may leave organisations open to substantial fines. It also underlines the importance of organisations making sure that their own guidelines are being followed. The amount of the fine is yet another indicator that the authorities take this area very serious and that the authorities will seek to take the profit from the organisation in breach along with an amount based on the seriousness of the matter.

If you have any questions regarding anti corruption, please feel free to contact Claus Andersen on 020 7583 2222.

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