FCA Fines Nationwide £44m for Financial Crime Failings

The Financial Conduct Authority has imposed a £44 million fine on Nationwide Building Society for significant failures in its financial crime systems and controls, reinforcing the regulator’s uncompromising stance on anti-money laundering governance across the UK banking sector. The penalty relates to weaknesses that persisted between October 2016 and July 2021, during which Nationwide was unable to effectively identify, assess, monitor, or manage money laundering risks within its personal current account customer base.

According to the FCA, Nationwide failed to maintain up-to-date customer due diligence and risk assessments and did not adequately monitor transactions across its personal current accounts. These shortcomings were compounded by the firm’s awareness that some customers were using personal accounts for business purposes, in breach of its own terms and conditions. At the time, Nationwide did not offer business current accounts and therefore lacked the appropriate controls and processes to manage the elevated financial crime risks associated with business activity.

The FCA concluded that these failings left Nationwide without an accurate understanding of which customers posed higher financial crime risks. As a result, red flags were missed, undermining the firm’s ability to prevent and detect money laundering and related economic crime. The regulator highlighted that weaknesses were known internally but were not addressed with sufficient urgency.

One of the most serious examples cited involved fraudulent Covid furlough payments. Nationwide failed to identify a customer who used personal current accounts to receive 24 furlough payments totalling £27.3 million over a 13-month period, including £26.01 million deposited over just eight days. While His Majesty’s Revenue and Customs recovered £26.5 million, approximately £800,000 remains unrecovered, illustrating the real-world consequences of ineffective transaction monitoring.

Therese Chambers, joint executive director of enforcement and market oversight at the FCA, stated that Nationwide failed to gain proper control over the financial crime risks embedded within its customer base and took too long to remediate known weaknesses. She emphasised that banks and building societies play a critical role in tackling financial crime and must remain vigilant to prevent abuse of the financial system.

Nationwide has since undertaken a large-scale financial crime transformation programme, which commenced in July 2021. However, the FCA determined that earlier remedial actions were insufficient and delayed, warranting significant enforcement action. The original penalty of £62,969,297 was reduced to £44,078,500 after Nationwide agreed to resolve the matter and qualified for a 30 percent settlement discount under the FCA’s enforcement procedures.

This enforcement action sits within a broader regulatory trend. Since 2021, the FCA has imposed 13 fines on banks for anti-money laundering systems and controls failings, totalling more than £300 million. Fighting financial crime remains a central pillar of the FCA’s five-year strategy, underscoring heightened expectations on governance, customer due diligence, and transaction monitoring across the UK financial services sector.

Read the press release here.