AMLBankingFinTechKYCPEPsPolitically Exposed Persons

Barclays Hit by £72 Million Fine For Slack Checks on Rich Clients

By November 27, 2015 April 28th, 2019 No Comments
Barclays received £72 fine

Barclays was dealt the largest disgorgement penalty ever imposed by the FCA, after a damning report found that it was lax in checking rich politically exposed clients, who were part of an “elephant” £1.9 billion “deal of the century”, because it didn’t want to inconvenience them.
Barclays kept details of clients and transactions off its computer system, restricted the number of staff involved in the deal and promised to pay the clients £37.7 million if their names were ever revealed.

The bank did so even though it recognised that the clients were part of an especially risky, “Sensitive” sub-group of politically exposed people. The FT reports that the clients were Qatari.

Imposing a £72 million fine on Wednesday, the FCA criticised the bank’s “ad hoc” approach to the risk of financial crime, noting its failure to adequately establish the purpose and nature of the deal and to corroborate clients’ stated source of funds.

Like the hefty penalties imposed by the Commission in Guernsey this October, the initial fine was discounted (here by 30%) in light of settlement at an early stage of the investigation and was imposed even in the absence of a finding that financial crime actually materialised.

Transparency International UK and Global Witness have called for further action against individuals involved. However, the FCA said that it was “unclear” which senior managers were responsible for making the checks and Barclays refused to comment on which individuals were involved and whether they will stay in their posts.

It’s another eye-watering reminder to all compliance professionals that it’s crucial to apply proper checks on politically exposed persons across the board. The FCA isn’t cutting any corners. Financial services need to ensure that they’re equipping themselves with the regulatory tools that enable them to follow suit.

-Post by Stephen Ball

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