FCA fines Metro Bank £16.7m for anti-money laundering failings

(Sharecast News) - The Financial Conduct Authority said on Tuesday that it has fined Metro Bank £16.7m for failing to have the right controls in place to combat money laundering. The regulator said that between June 2016 and December 2020, the bank did not have the right systems and controls to adequately monitor over 60 million transactions, with a value of over £51bn, for money laundering risks.

Metro automated the monitoring of customer transactions for potential financial crime in June 2016. However, its system did not work as intended, the FCA said.

It pointed out that an error in how data was fed into the system meant transactions taking place on the same day an account was opened, and any further transactions until the account record was updated, were not monitored.

The FCA said that while junior staff did raise concerns about some transaction data not being monitored in 2017 and 2018, this did not result in the issue being identified and fixed.

"Even once a fix had been put in place in July 2019, Metro did not have a mechanism to consistently check that all relevant transactions were being fed into the monitoring system until December 2020, over four and a half years after the system was implemented," the FCA said.

Therese Chambers, joint executive director of enforcement and market oversight, said: "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."

News of the fine came alongside the bank's third-quarter trading update, which showed that it returned to profitability in October, in line with guidance.

The net interest margin improved to 2.48% in October, up 84 basis points since the first half. Meanwhile, total net loans as at 30 September were £9.1bn, down 22% compared to the half year, but this reflected the sale of the company's mortgage portfolio.

Metro said customer deposits declined by £1.4bn on the February 2024 peak of around £16.5bn, reflecting "the continued focus on improving cost of deposits".

Chief executive Daniel Frumkin said: "Metro Bank continued to make strong progress during the third quarter, including the announcement of our collaboration with Infosys to create a simpler, more agile and digitally enabled bank for the future.

"The bank returned to profitability in October, in line with guidance, and thanks to our continued emphasis on cost discipline and balance sheet management. NIM improved, driven by our asset rotation into niche and underserved markets, and the successful completion of the mortgage portfolio sale to NatWest."