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Nationwide has been ordered to pay a £44 million fine after the Financial Conduct Authority (FCA) found that the building society lacked adequate processes to detect financial crime from 2016 to 2021. The regulator highlighted that Nationwide’s systems for risk assessment and transaction monitoring were ineffective during this period. One notable case involved £26 million in fraudulent Covid furlough payments being deposited into a single personal account over just eight days, which went unnoticed.
Although Nationwide did not provide business accounts during the timeframe in question, the FCA noted that the organization was aware some customers were using personal accounts for business-related transactions. However, it did not maintain an accurate understanding of which customers posed higher risks for financial crime. Consequently, the institution failed to properly monitor money laundering risks. The customer who received the fraudulent furlough funds actually collected £27.3 million over 13 months, with the tax authority recovering most—but not all—of that amount.
The FCA criticized Nationwide for not reacting promptly to suspicious activity, stating that the controls in place should have triggered earlier investigations. The government’s Job Retention Scheme (JRS) provided furlough payments to support businesses during the pandemic, and receiving such funds was a clear indicator that an account was being used for business purposes. The FCA revealed that a total of £64 million in JRS funds had been paid into over 5,000 personal accounts held at Nationwide.
In response to the fine, Nationwide said it cooperated fully with the FCA’s investigation and acknowledged the shortcomings in its controls during the period. A spokesperson expressed regret that their systems did not meet expected standards but emphasized the substantial investments made since 2021 to improve their economic crime controls. They also stated, “We do not believe that these controls issues caused financial loss to any of our customers and remain committed to preventing economic crime and protecting our customers and the wider UK economy from fraud.” Therese Chambers, joint executive director of enforcement and market oversight at the FCA, remarked, “Nationwide failed to get a proper grip of the financial crime risks lurking within its customer base. It took too long to address its flawed systems and weak controls, meaning red flags were missed with serious consequences.
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