Nationwide has been fined £44m FOR NOT SPOTTING £26m of fraudulent Covid furlough payments.

Nationwide has been fined £44m for failing to have the right processes in place to detect financial crime between 2016 and 2021.

The Financial Conduct Authority (FCA) said.

• The building society had "ineffective systems" for assessing risk and monitoring the transactions of its customers,

In one instance,

• Nationwide missed opportunities to identify unusual activity after £26m of fraudulent Covid furlough payments
• THE £26M were paid into one personal account in the space of just eight days.

During the period in question, Nationwide did not offer business accounts.

The FCA said that

• Even though the building society was aware that some customers were using personal accounts for business activity, it did not have an accurate picture of who presented a higher risk of financial crime.
• As a result, money laundering risks were not effectively monitored, it said.
• The customer who banked the illegitimate furlough payments received £27.3m over 13 months. Most, but not all of it, has since been recovered by the tax authority.

The FCA said

• Nationwide's controls should have prompted a review of the unusual activity more quickly than it did.

• The government provided furlough or Job Retention Scheme (JRS) funds to support firms during the Covid pandemic.
• The receipt of JRS funds was a strong indication that an account was being used for business purposes,  
• In all, £64m of Job Retention Scheme (JRS)  funds were paid into more than 5,000 personal accounts at Nationwide

Therese Chambers, joint executive director of enforcement and market oversight at the FCA SAID

• "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."  

Nationwide said it had identified the shortcomings through its own reviews and had brought them to the FCA's attention.

• "We are sorry that our controls during the period fell below the high standards we expect," a spokesperson said.
• "Since 2021, Nationwide has invested significantly in all aspects of its economic crime control framework to ensure our systems are robust.
• "We do not believe that these control 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," they added.

Nationwide said

• It had fully cooperated with the regulator's investigation and, since 2021, had invested in its crime-control systems to ensure they were "robust".

SOURCE

https://www-bbc-com.cdn.ampproject.org/c/s/www.bbc.com/news/articles/c1e440e49q6o.amp