FCA Fines Metro Bank £16M Over Lapses in Money Laundering Controls

Metro Bank has been fined more than £16 million by the UK's Financial Conduct Authority (FCA) for severe flaws in its transaction monitoring systems designed to combat money laundering. The FCA's inquiry discovered that Metro Bank failed to develop suitable procedures to adequately monitor nearly 60 million transactions totaling more than £51 billion going back to 2016.

Metro Bank's issues started in June 2016, when it adopted an automated monitoring system. The system was defective from the start despite its intended purpose of detecting evidence of financial wrongdoing. Due to data processing problems, transactions done on the same day an account was opened—or until the account record was updated—were ignored by the monitoring system. Junior employees at Metro Bank allegedly expressed concerns in 2017 and 2018 about holes in transaction monitoring. However, these issues were not adequately addressed, and the monitoring gap remained until July 2019, when the bank established a temporary solution. A comprehensive solution was not implemented until December 2020, more than four years after the monitoring system's first launch.

Therese Chambers, joint executive director of enforcement and market monitoring at the FCA, voiced worry about the duration of these failures. “Metro's failures threatened to leave a vacuum in our protection against illicit exploitation of our financial system. ”Those failings persisted for far too long, Chambers said.

This is hardly Metro Bank's first encounter with authorities. The FCA levied a £10 million penalty in 2022 for breaches of Listing Rules, including providing investors with misleading information regarding its prudential status. Former executives, including CEO Craig Donaldson and CFO David Arden, received individual fines of £223,100 and £134,600 for their roles in the incident.

In light of these recurring concerns, Metro Bank has had significant hurdles in preserving its regulatory status. Mistakes in transaction monitoring and financial reports have raised persistent questions about the bank's operational control and regulatory compliance.

Final Thoughts

The FCA's sanctions against Metro Bank highlight the need for strong compliance frameworks, especially in a financial climate that requires strict anti-money laundering measures. Addressing systemic problems and adopting rigorous controls will be important for Metro Bank in regaining the trust of regulators and stakeholders.