Barclays

Release Date: 28th February 2022

To access the original FCA document, click here.

Summary

Barclays Bank Plc was fined £783,800 by the Financial Conduct Authority (FCA) on 24 February 2022 for failing to properly oversee and monitor its business relationship with Premier FX. This fine was reduced from £1,119,767 due to an early settlement agreement. Additionally, Barclays agreed to make an ex gratia payment of £10,076,943.75 to be distributed among Premier FX’s customers. The FCA found that Barclays did not conduct its business with due skill, care, and diligence, breaching Principle 2.

Key Takeaways for Other Firms:

• Enhanced Due Diligence:
  • Conduct regular and thorough AML/EDD reviews, ensuring they are completed timely and accurately.
  • Avoid repeating information in review reports without proper verification.
• Client Monitoring:
  • Monitor clients’ business activities to ensure alignment with the bank’s understanding of their operations.
  • Pay attention to the purpose of clients’ accounts and any changes in their business plans.
• Risk Management:
  • Categorise high-risk clients appropriately and implement stringent monitoring measures.
  • Verify that clients maintain robust internal controls, especially segregating client funds from company funds.

Summary of Findings:

• Insufficient Monitoring:
  • Barclays conducted nine AML/EDD reviews of Premier FX but failed to complete reviews timely in two calendar years.
  • Review reports contained repeated information, including errors that were not identified or corrected.
  • Barclays failed to accurately reflect the correct number of bank accounts operated by Premier FX in review records.
• Inadequate Response to Red Flags:
  • Barclays did not challenge information provided by Premier FX’s management adequately, nor did they consider the risks posed by the rapid growth of Premier FX’s business.
  • Barclays opened several accounts for Premier FX’s associated companies without proper consideration of how these accounts affected the conduct of its business.
  • Delays in receiving independent compliance reports were not adequately addressed.
• Failure to Verify Compliance:
  • Barclays failed to confirm that Premier FX maintained robust internal controls to segregate client funds from company funds until January 2015, despite this being a minimum requirement from May 2013.
  • Barclays relied on unaudited accounts and incomplete information regarding Premier FX’s financial health and plans.

In conclusion, the FCA’s action against Barclays underscores the necessity for banks to maintain rigorous oversight and monitoring of high-risk clients, ensuring their activities align with regulatory standards and internal expectations. Firms must implement thorough and timely due diligence processes to prevent financial crime and protect consumer interests.

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