Metro Bank fined £16.7m by FCA for failing to police financial crime

Metro Bank has been fined almost £16.7 million after an investigation by the city watchdog found historic failings in the lender’s money laundering controls.

Between June 2016 and December 2020, Metro “failed to have adequate systems and controls” to properly monitor more than 60 million transactions worth more than £51 billion, the Financial Conduct Authority said.

The regulator said Metro’s automated monitoring system for customer transactions “did not function as expected.”

This meant that transactions that took place on the same day an account was opened, and any subsequent transactions until the account record was updated, were not monitored.

Metro would have been fined more than £23.8 million but qualified for a 30 per cent discount by agreeing to resolve the matter.

This follows a £29m fine imposed on Starling Bank last month for what the FCA described as “shockingly lax” financial crime controls, which “left the financial system wide open to criminals” over a four-year period. .

The FCA’s most recent investigation also found that “junior” Metro staff had raised concerns that some transaction data was not monitored in 2017 and 2018, but this “did not result in the issue being identified and fixed.” .

A fix was implemented in July 2019, but Metro still did not have a mechanism to “consistently” verify that all relevant transactions were being entered into the monitoring system until December 2020, four and a half years after the system was implemented, the FCA said.

Therese Chambers, joint executive director of law enforcement and market oversight, added: ‘Metro’s failures risked leaving a gap in our defense against criminal misuse of our financial system. Those failures continued for too long.”

Metro said in a statement that it has since resolved flaws in the transaction monitoring system and made “improvements” to transaction monitoring.

Metro CEO Daniel Frumkin said: “The conclusion of these investigations draws a line under this legacy issue, allowing the bank to move forward and focus fully on the future, building on the strong foundation it has already laid.”

“We continue, apace, our shift towards higher yielding specialist mortgages and commercial, corporate and SME loans with a strong portfolio of business.”

Frumkin also took the opportunity to announce a return to underlying profitability in October after upgrading full-year guidance in its half-year results.

The bank has recently cut hundreds of jobs as part of an £80m cost-cutting plan after the lender secured a £925m rescue deal last year under which Colombian billionaire Jaime Gilinski Bacal took over. control of the business.

Frumkin said October’s profitability reflected “the significant progress made in delivering on the bank’s strategic priorities.”

He added: “Our relationship-based banking model will enable Metro Bank to go from strength to strength as we advance our growth agenda and move towards long-term sustainable profitability.”