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Watchdog to investigate money laundering at Barclays
- FCA is investigating Barclays’ anti-money laundering practices
- Made the switch after discovering a large number of suspected money laundering incidents
- Barclays has issued a notice demanding an independent review of its systems
The financial watchdog has launched an investigation into Barclays’ anti-money laundering practices.
The Financial Conduct Authority (FCA) took the step last spring after noticing the large number of suspected money laundering incidents at the bank.
Barclays received a notice from the watchdog demanding an independent review of its systems to prevent and detect financial crime. The process is known as a section 166 — or expert review — and usually involves an outside accounting or law firm conducting an investigation and preparing a report with recommendations for improvement.
The review is part of the FCA’s oversight powers, but may be referred to the watchdog’s enforcement division if misconduct is suspected.
At the launch of the review, the FCA sent a Section 166 letter to Barclays UK boss Matt Hammerstein and chief operating officer Alistair Currie.
Probe: The financial watchdog has launched an investigation into Barclays’ anti-money laundering practices
The investigation, which first emerged yesterday, has been ongoing for a year and is still ongoing.
British authorities have tried to crack down on financial controls at the country’s largest banks in recent years.
This comes amid widespread criticism that London has become one of the world’s largest hubs for the movement of illicit funds. NatWest was fined £265 million in December 2021 for failing to prevent money laundering amounting to nearly £400 million, in the first money laundering case brought by regulators against a UK bank.
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Gary Greenwood, an analyst at Shore Capital, said: “NatWest’s fine gives an idea of the size of a potential penalty Barclays could face. Again, it seems that Barclays may have stepped on a banana peel and this will add to the perception that it is somewhat accident prone.” The FCA investigation is the latest in a series of scandals that rocked the London-based banking giant.
It’s still reeling from the departure of Jes Staley, who stepped down as CEO over his ties to convicted pedophile Jeffrey Epstein.
Staley transferred to Coimbatore Sundararajan Venkatakrishnan, known as Venkat, who is being treated for cancer.
In November, the bank was labeled ‘reckless and lacking in integrity’ by the FCA as it was fined £50m for its secret deals with Qatar to avoid a bailout during the financial crisis.
Last April, Barclays was accused by the Bank of England of ‘playing the rules’ over pensions, using complex transactions with its employees’ pension funds to boost its capital buffer.
And in December 2021, HSBC, Barclays and NatWest were fined by the European Commission for their role in a foreign exchange trading cartel through a chat room called ‘Sterling Lads’.
The FCA under chief Nikhil Rathi has promised a more aggressive approach to money laundering after a series of scandals. It has repeatedly warned banks doing business in the UK that their supervisory and reporting systems are not up to scratch.
Barclays will report annual results next week. Investors are likely to focus on the investment bank’s performance amid a reshuffling of senior executives in recent weeks. The bank will also provide further information on any legal and regulatory matters in which it is involved.