The UK’s Financial Conduct Authority (FCA) has imposed a fine of approximately £16.7 on Metro Bank for failing to monitor money laundering risks.
During the period between June 2016 and December 2020, the British retail and commercial bank lacked the right systems and controls to properly monitor more than 60 million transactions, amounting to over £51bn.
According to the FCA’s investigation, Metro Bank’s automated transaction monitoring system, implemented in June 2016, was ineffective due to an error in the way data was fed into the system.
As a result, transactions made on the same day an account was opened, as well as any subsequent transactions until the account record was updated, were not monitored for potential financial crime.
The issue persisted despite concerns raised by junior staff in 2017 and 2018, who noted that some transaction data was not being properly monitored.
However, these concerns were not addressed, and the problem remained unresolved for over four and a half years.
Even after a fix was introduced in July 2019, Metro Bank failed to implement a consistent checking mechanism to ensure all relevant transactions were being monitored until December 2020.
FCA enforcement and market oversight joint executive director Therese Chambers 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.”
Following the identification of the issue in April 2019, Metro Bank initiated corrective measures, and the FCA noted that the bank has since implemented processes to address the deficiencies.
But during the relevant period, Metro Bank failed to monitor around 6% of its total transaction volume. This also led to significant delays in identifying suspicious activity and increased the risk of financial crime.
Despite this, many of the unmonitored transactions were reviewed later as part of a remediation effort, the Lookback Review, which was completed in 2022. Consequently, Metro Bank submitted 153 suspicious activity reports and closed 43 customer accounts.
The bank qualified for a 30% discount under the FCA’s executive settlement procedures for resolving the matter. Without the discount, the penalty would have amounted to £23.8m.
Metro Bank CEO Daniel Frumkin said: “The conclusion of these enquiries draws a line under this legacy issue, allowing the bank to move forward and fully focus on the future, building on the solid foundations it has already laid.
“We are continuing, at pace, our shift towards higher yielding specialist mortgages and commercial, corporate and SME lending with a strong pipeline of business.”
