Barclays Fined Over $108 Million For Intentionally Ignoring Procedures That Could Have Led To Financial Crime

Barclays has been fined 72 million pounds ($108.3 million) by Britain’s Financial Conduct Authority (FCA) for improperly screening affluent customers. According to the FCA, the bank did not follow compliance procedures when it arranged a 1.9 billion pound ($2.8 billion) deal involving several wealthy clients.

Barclays previously got into trouble and was fined several billion dollars earlier this year, as well. As previously reported by the Inquisitr, Barclays was involved with several other banks in a scheme to manipulate foreign exchange prices.

Barclays recevieves fine from FCA for $109 million.
CNN reports the FCA fined Barclays this time because the banking conglomerate failed to perform required detail checks on clients who were deemed “politically exposed persons,” or people who could be open to financial abuse due to their status. These clients could include high-ranking public officials and even well-to-do foreign nationals from countries such as Iran and Syria.

In order to expedite the deal and not “irritate” these clients, Barclays chose to cut corners and not perform the checks as directed. One manager involved wanted to hastily move the deal along in order to generate huge commissions payable to the bank.

“Barclays did not follow its standard procedures, preferring instead to take on the clients as quickly as possible and thereby generated 52.3 million pounds in revenue,” the FCA said.

According to the UK Daily Mail, Barclays, as well as other banks, is specifically mandated to ask ultra-rich clients where they get their money. This is to ensure the money does not come from activities related to terrorism or financial crime. The FCA worries Barclays’ sloppy procedures in vetting these types of clients could undermine the U.K. financial system and put additional stress on society’s financial integrity.

In a 37-page report, the FCA said Barclays took decisive steps to hide the murky deal in order to persuade clients to accept it.

Certain financial information related to transactions like these is normally recorded in the bank’s computer system, however, Barclay employees purposely failed to enter crucial details of this particular arrangement. Barclays also agreed to pay these rich clients 37.7 million pounds ($56.7 million) should they ever be exposed as part of the agreement. Barclays even bought a special safe to keep hard copies of the contract locked away.

To ensure secrecy, only very few Barclays’ employees knew about the deal, including some key executives who have since left the financial behemoth. Barclays utilized several offshore companies, a trust, and temporary bank accounts for money transfers to further hide the business deal.

The British financial watchdog did not reveal any names of the clients involved. The only clue was from Barclays themselves. The clients were described as individuals who received their prosperity through “landholdings, real estate and business and commercial activities.”

The complex series of transactions, including 20 money transfers, occurred in 2011 to 2012. Regardless, Barclays was still ignoring procedures related to the deal as recently as November 2014. It wasn’t until the FCA got involved that the wrongdoings came to light.

When the bank requested several million dollars to be paid to a third party and subsequently withdrawn, the FCA caught wind of something going on and decided to ask some questions.

FCA director of enforcement and market oversight, Mark Steward said, “Barclays ignored its own process designed to safeguard against the risk of financial crime and overlooked obvious red flags to win business and generate significant revenue. This is wholly unacceptable.”

Barclays Bank ignored important procedures designed to maintain financial stability.
Headquartered in London, Barclays is multinational banking and financial services company. It is the seventh-largest bank in the world, operating in over 50 countries with approximately 48 million customers.

Although Barclays was fined for the mishandling of the deal, the FCA did not find any evidence of a financial crime related to the arrangement. Barclays fully cooperated with the FCA during the investigation and received a 30 percent discount on the fine for early payment.

[Photo by Lefteris Pitarakis/AP Images]