UK’s Financial Conduct Authority (FCA) has fined Barclays more than £72m for failing to reduce the risk that it could be used to facilitate financial crime.
The fine stemmed from a transaction of £1.8bn pounds for ultra-high-net-worth clients in 2011 and 2012. The clients were deemed by the regulator to be politically exposed persons (PEPs), or people holding prominent positions.
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The clients should have been subject to enhanced levels of due diligence and monitoring by Barclays, FCA said in a statement.
According to report from FCA, Barclays did not follow its standard procedures, preferring instead to take on the clients as quickly as possible and thereby generated £52.3m in revenue.
The regulator also found that Barclays did not get the information required from the clients to comply with financial crime requirements because it did not wish to ‘inconvenience’ the clients.
The transaction also covered investments in notes backed by underlying warrants and third party bonds.
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By GlobalDataAlso, clients were offered up to £37.7m in compensation if the bank failed to comply with confidentiality restrictions. The bank agreed to keep details of the transaction strictly confidential even within the firm.
The fine includes disgorgement of £52.3m and a penalty of £19,769,400.
The FCA also said Barclays kept all of its due diligence records as hard copies and not on Barclays’ systems to protect the clients’ confidentiality.
The FCA did not find any evidence that financial crime was involved or facilitated by Barclays.
Barclays has cooperated fully with the FCA throughout and continues to apply significant resources and training to ensure compliance with all legal and regulatory requirements.
FCA director of enforcement and market oversight Mark Steward 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.
"Firms will be held to account if they fail to minimise financial crime risks appropriately and for this reason the FCA has required Barclays to disgorge its revenue from the Transaction."
