Metro Bank fined £16.7m for failure to monitor possible money laundering

The City regulator has fined Metro Bank almost £17 million for “serious” flaws in its systems to tackle financial crime that meant it failed to scrutinise transactions worth more than £51 billion over four years.
An investigation by the Financial Conduct Authority found that problems with an automated system to detect money laundering risks introduced by the lender in early June 2016 meant about 60.5 million transactions had gone unmonitored by the bank by mid-December 2020.
Some of the failings persisted despite junior staff at Metro raising concerns internally that went unheeded, the watchdog said. It would have levied a £23.8 million penalty but reduced the fine to £16.7 million because the lender had agreed to resolve the matter.
Therese Chambers, the authority’s joint executive director of enforcement and market oversight, said: “Metro’s failings risked a gap being left in our defence against the criminal misuse of our financial system. Those failings went on for too long.”
It is the latest in a series of blows suffered by Metro, which was founded in 2010 with the aim of shaking up Britain’s banking industry. It stunned investors by revealing an accounting blunder in early 2019, which not only caused its shares to tumble and forced it to raise capital but also resulted in a string of fines.
The Bank of England imposed a £5.4 million penalty on Metro in 2021 and a year later the Financial Conduct Authority levied a £10 million fine on the bank, as well as penalties of £223,100 and £134,600 on the lender’s former boss, Craig Donaldson, and finance chief, David Arden, respectively.
Fears about Metro’s financial health last autumn also forced the lender into a £925 million rescue deal that handed control of the London-listed group to Jaime Gilinski, a Colombian billionaire.
Dan Frumkin, Metro’s chief executive since 2020, who is trying to turn the business around, said Tuesday’s fine “draws a line” under the lender’s transaction monitoring problems, “allowing the bank to move forward and fully focus on the future”.
The regulator’s inquiry found that a technical glitch meant transactions that occurred on the day an account was opened, and subsequent transactions, were not fed into Metro’s system.
This problem, which accounted for the bulk of the unmonitored transactions, lasted three years from the system’s inception and was exacerbated by inadequate checks by the bank of the completeness of the data sent to its system. The authority said it considered this “a serious failure”.
Other records were also rejected by Metro’s monitoring system because they were deemed to be “bad data” and so also went unscrutinised. This “bad data” was “recognised as a risk and a serious issue at comparatively less senior grades within Metro and individual staff members investigated and attempted to escalate this issue to more senior staff,” the authority said, but “no substantive action was taken”.
• Metro Bank pauses asset finance lending after car loan ruling
A subsequent review of all the unmonitored transactions resulted in Metro filing 153 suspicious activity reports to the authorities and the closure of 43 customer accounts.
The fine was announced alongside an upbeat third-quarter trading update from Metro, in which the business, which was previously lossmaking due to the turmoil of recent years, said it returned to profitability in October. Its shares rose by 1¾p, or 2.25 per cent, to 86½p.