Nationwide Building Society has been fined £44 million by the UK’s financial watchdog for failures to handle financial crime risks linked to its customers, including cases of Covid fraud.
The building society had inadequate anti-financial crime systems and controls between October 2016 and July 2021, the Financial Conduct Authority (FCA) said.
It found Nationwide was aware that some of its personal current account customers were using their accounts for business activity, but did not have the right controls to manage the resulting financial risks.
This meant it was unable to spot and manage money laundering risks and it did not have an accurate assessment of customers who showed a higher risk of financial crime.
In one serious case, Nationwide missed opportunities to spot a customer using personal current accounts to receive £27.3 million worth of fraudulent Covid furlough payments, the FCA said.
HMRC recovered £26.5 million but about £800,000 remains unrecovered.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: “Nationwide failed to get a proper grip of the financial crime risks lurking within its customer base.
“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.”
A spokesman for Nationwide said the building 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.”
