Nationwide Building Society Hit with £44 Million Fine Over Financial Crime Control Failures

FCA Imposes Record Penalty on UK’s Largest Building Society

The Financial Conduct Authority (FCA) has fined Nationwide Building Society £44 million for inadequate anti-financial crime systems and controls between October 2016 to July 2021. This significant regulatory action highlights the critical importance of robust financial crime prevention measures within the UK banking sector.

Nationwide is the world’s largest building society, with over 16 million members, and following its acquisition of Virgin Money UK PLC, Nationwide is connected with one in three people in the UK and is the second largest provider of mortgages and retail deposits. The scale of this fine underscores the FCA’s determination to hold major financial institutions accountable for lapses in their crime prevention systems.

Key Failures Identified by the Regulator

During this period, Nationwide had ineffective systems for keeping up-to-date due diligence and risk assessments for all its personal current account customers and for monitoring their transactions. Nationwide was also aware that some of those customers were using their personal accounts for business activity, in breach of its terms. Nationwide did not offer business current accounts at this point, so did not have the right processes in place to manage the financial crime risks from business activity.

The regulator concluded that Nationwide was unable to effectively identify, assess, monitor or manage the money laundering risks among its personal current account customers. The FCA said these shortcomings meant warning signs went unnoticed, potentially allowing financial criminals to operate undetected within the building society’s customer base.

Nationwide’s Response and Future Outlook

Nationwide identified these issues, which relate to controls in place before July 2021, through its own reviews, and voluntarily brought them to the attention of the FCA. The organisation has acknowledged its shortcomings and made significant investments in its economic crime control framework since 2021.

Nationwide would have been fined £62,969,297, but it agreed to resolve these matters and so qualified for a 30% discount under the FCA’s processes. The total fine is £44,078,500. This penalty serves as a stark reminder to all financial institutions of their crucial role in combating money laundering and financial crime. For Nationwide’s millions of members and customers across the UK, the building society’s commitment to strengthened controls provides reassurance that lessons have been learned from these historic failings.