Regulator says mutual failed to manage money laundering risks in personal current account book
The Financial Conduct Authority (FCA) has imposed a £44 million fine on Nationwide Building Society after identifying significant gaps in its anti‑financial crime framework over nearly five years.
Between October 2016 and July 2021, Nationwide’s systems for maintaining up‑to‑date customer due diligence and risk assessments for personal current account holders were found to be inadequate. The building society also failed to carry out effective monitoring of customer transactions during this period.
The regulator said Nationwide knew that some personal current account customers were using those accounts for business purposes, contrary to its terms and conditions. FCA claimed that at the time, Nationwide did not provide business current accounts and therefore lacked appropriate controls to manage the additional financial crime risks posed by business activity through personal accounts.
As a result, Nationwide was unable to properly identify, assess, monitor or mitigate money laundering risks within its personal current account book. It also lacked a reliable view of which customers presented a higher risk of financial crime.
In one case highlighted by the FCA, the mutual missed opportunities to detect a customer using personal current accounts to receive fraudulent COVID furlough payments. The customer received 24 payments over 13 months, totalling £27.3 million, with £26.01 million credited over just eight days. HM Revenue & Customs recovered £26.5 million, but about £800,000 remains outstanding.
Nationwide faced a potential penalty of nearly £63 million, but received a 30% reduction under the FCA’s settlement procedures after agreeing to resolve the case, resulting in a final fine of £44,078,500.
“Nationwide failed to get a proper grip of the financial crime risks lurking within its customer base,” said Therese Chambers (pictured right), joint executive director of enforcement and market oversight at the FCA. “It took too long to address its flawed systems and weak controls, meaning red flags were missed with serious consequences.
“Building societies and banks have a key role in the fight against financial crime. Firms must remain vigilant in this fight.”
According to the FCA, Nationwide had been aware of weaknesses in its financial crime systems and controls and had started work to improve them. However, the regulator found that the firm did not remedy those shortcomings quickly or effectively enough. The building society launched a large‑scale financial crime transformation programme in July 2021.
A spokesperson for Nationwide Building Society said: “Nationwide identified these issues, which relate to controls in place before July 2021, through its own reviews, and voluntarily brought them to the attention of the FCA.
“The Society cooperated fully with the FCA investigation, and we are sorry that our controls during the period fell below the high standards we expect. Since 2021, Nationwide has invested significantly in all aspects of its economic crime control framework in order to ensure our systems are robust.
“We do not believe that these controls issues caused financial loss to any of our customers and remain committed to preventing economic crime and protecting our customers and the wider UK economy from fraud.”
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