The UK 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.

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.

This meant Nationwide was unable to effectively identify, assess, monitor or manage the money laundering risks among its personal current account customers. It also meant Nationwide did not have an accurate picture of its customers who presented a higher risk of financial crime.

In one serious case, Nationwide missed opportunities to identify a customer using personal current accounts to receive fraudulent Covid furlough payments. The customer received 24 payments totalling £27.3 million over 13 months, with £26.01 million of this deposited over 8 days. His Majesty’s Revenue & Customs (HMRC) recovered £26.5 million, but approximately £800,000 remains unrecovered.

Nationwide was aware of weaknesses in its systems and controls and undertook work to make improvements. However, it failed to adequately address those weaknesses in a timely manner. Nationwide subsequently commenced a large-scale financial crime transformation program in July 2021.