RegulationDec 3 2015

FCA fines Barclays £72m for due diligence failure

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FCA fines Barclays £72m for due diligence failure

Barclays Bank has been fined £72m by the FCA, bringing the total amount it has been told to pay by regulators this year to more than £1.7bn.

Its latest fine was for failing to minimise the risk that the bank may be used to facilitate financial crime.

These failings related to a £1.88bn transaction Barclays arranged and executed in 2011 and 2012 for a number of ultra high net-worth clients.

The clients involved were politically exposed persons, and should have been subject to enhanced levels of due diligence and monitoring by Barclays.

But Barclays did not follow its standard procedures and instead took on the clients as quickly as possible, generating £52.3m in revenue.

Mark Steward, director of enforcement and market oversight at the FCA, 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.”

The FCA made no finding that the transaction, which involved investments in notes backed by underlying warrants and third-party bonds, involved a financial crime.

The Libor scandal has led to 2015 being a particularly expensive year for Barclays as it has been fined several times.

Top five fines of 2015 levied by the FCA so far

Barclays Bank Plc£284mLibor
Deutsche Bank AG£226mLibor
The Bank of New York Mellon London branch and The Bank of New York Mellon International Limited£126mFailing to comply with rules which apply to safe custody assets and to client money
Lloyds Banking Group£117mFailing to treat their customers fairly when handling PPI complaints
Barclays Bank Plc£72mFailing to minimise the risk it may be used to facilitate financial crime

Barclays is the only company to have been fined twice by the FCA this year so far and it has been fined seven times since 2009 by the regulator and its predecessor the FSA, paying out a total of nearly £500m.

Last month the bank was fined $150m (£99m) for misconduct in foreign exchange trading as part of a settlement with the New York State department of financial services.

In May Barclays agreed to pay a combined total of £1.5m to five different financial authorities - including £284m to the FCA - over misconduct relating to its foreign exchange business.

Right to reply

In a statement, Barclays 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.”