Barclays Faced £42 Million Penalty for Negligence in Money Laundering Risk Management
### FCA Imposes Significant Fines on Barclays for Financial Crime Failings
The Financial Conduct Authority (FCA) has imposed hefty penalties on Barclays Bank for shortcomings in its financial crime risk management. These fines are linked to two separate instances involving **WealthTek** and **Stunt & Co.**
#### Barclays Penalties
- **Total Fine**: Barclays has been fined a total of £42 million by the FCA [1][2]. - **Breakdown**: - **WealthTek Case**: Barclays was fined for failing to adequately assess the money laundering risk before opening a client money account for WealthTek. The bank has agreed to make a voluntary payment of £6.3 million to WealthTek's clients who are facing a shortfall [1][2]. - **Stunt & Co. Case**: Barclays was fined £39.3 million for failing to manage money laundering risks associated with providing services to Stunt & Co. [2][3].
#### WealthTek Investigation
- **Criminal Charges**: In December 2024, the FCA charged WealthTek's principal partner with multiple criminal offenses, including money laundering and fraud [2]. - **Regulatory Intervention**: WealthTek was placed into special administration following FCA intervention due to suspected criminal activity and operating outside its regulatory permissions [1].
#### Stunt & Co. Investigation
- **Nature of the Case**: The FCA found that Barclays failed to gather sufficient information about Stunt & Co.'s business nature, source of wealth, or funds during the onboarding process in January 2015. This led to inadequate due diligence despite indicators of high-risk jurisdictions [3][4]. - **Suspicious Transfers**: Stunt & Co. received £46.8 million in suspicious transfers from Fowler Oldfield Ltd, a firm linked to money laundering [3].
#### Barclays' Response
Barclays has cooperated fully with both investigations and has strengthened its financial crime controls. The bank emphasizes its commitment to combating financial crime and fraud [1]. During its relationship with Stunt & Co, Barclays did not gather enough information and did not carry out proper ongoing monitoring. The bank also failed to properly consider the money laundering risks even after receiving information from law enforcement about suspected money laundering through Fowler Oldfield.
Last year, the FCA fined Barclays £40 million over the bank's conduct during a fundraising drive in 2008, which it described as 'reckless' and lacking integrity. Barclays has since strengthened its financial crime and other control capabilities.
- In addition to the recent fines imposed by the FCA for financial crime failings, Barclays Bank may want to reconsider its investment strategies in businesses associated with crime and justice to prevent potential future fines or crime-related issues.
- The financial sector, particularly banking, requires rigorous oversight in investing activities to ensure compliance with finance laws and general-news regulations, as demonstrated by the case of Barclays and their shortcomings in assessing the risk with WealthTek and Stunt & Co.
- As Barclays continues to focus on strengthening its financial crime controls, it would be prudent for the bank to establish and enforce policies for due diligence in business-related investing, in light of the penalties imposed due to inadequate assessments of WealthTek's money laundering risk and the suspicious transfers received by Stunt & Co.
