Santander's money laundering fine detrimental to customer trust

(Alliance News) - Santander got into hot water on Friday, after news travelled of its fine by the UK Financial Conduct Authority.

The Spanish financial services firm, Banco Santander SA, saw its UK division charged GBP107.7 million over "serious and persistent gaps" in its anti-money laundering controls.

Between December 2012 and October 2017, the FCA said that Santander had failed to properly oversee and manage its AML systems, thus impacting account oversight of more than 560,000 customers.

In one case, a new customer who had opened an account as a small translations business expecting monthly deposits of GBP5,000, began receiving millions, which were then transferred into several other accounts.

The account was recommended for closure in 2014, but no action was taken until 2015. Santander UK then agreed to a law enforcement request, but failed to keep track of the request until the FCA wrote to Santander UK in December 2016.

Breaches of this kind are a headache for any bank, said Sophie Lund-Yates at Hargreaves Lansdown, not least because of the fine, but also because of reputational damage.

"In all truth, this development is unlikely to change the story for Santander too much, but it will have worn down customers', and the regulator's patience, meaning any further breaches are unlikely to go down well," she warned.

Santander UK co-operated fully with the FCA investigation, and received a 30% discount for agreeing to settle. Had it decided to contest the ruling, the financial penalty would have been GBP154.0 million.

Banco Santander shares closed 1.0% lower at 238.50 pence each in London on Friday.

By Holly Beveridge; Alliance News reporter

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