Barclays fined £72m for failing to make checks on super-rich customers to win their business on secret £1.9bn deal

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Barclays was today fined over £72million for failing to put proper checks in place on super-rich customers to make sure the bank wasn't being used to facilitate financial crime.

The bank arranged and carried out a single £1.88billion transaction for a number of very wealthy clients in 2011 and 2012.

Since these clients – each with a personal wealth greater than £20million – were politically exposed, Barclays should have done extra checks on them to make sure the transaction had nothing to do with financial crime.

But rather than carrying out extra checks and due diligence, the bank actually carried out fewer.

Fined: Barclays will have to pay £72million for its conduct relating to a £1.88billion transaction

The Financial Conduct Authority, which imposed the fine, said that Barclays 'went to unacceptable lengths to accommodate the clients'.

It added that the bank turned its back on standard procedures, instead choosing to take on the clients as quickly as possible – and pocketing £52.3million in the process.

The bank should have asked its rich clients for certain information to make sure that they complied with financial crime requirements.

But Barclays decided not to, because it didn't want to inconvenience the clients, the FCA said.

In fact, it agreed to keep details of the transaction confidential – even within the firm – and agreed to indemnify the clients up to £37.7million if details of the transaction got out.

The FCA said that it did not find any evidence that the transaction did involve a financial crime and pointed out that it made no criticism of the clients.

It also did not express concerns about where the funds invested as part of the transaction came from, nor that profit Barclays received was derived from financial crime.

To make matters worse, few people knew of the existence and location of Barclays' due diligence records. They were kept in hard copy and not on Barclays' systems.

This had a negative impact on how the business relationship was monitored and also meant the bank could not respond quickly to the FCA's request for this information.

The watchdog also criticised the bank for failing to work out the purpose of the transaction or find out how the clients had so much money to carry it out; failing to make it clear whose job it was to oversee handling of financial crime risks; and failing to monitor sufficiently the ongoing risk of financial crime.

Mark Steward, director of enforcement and market oversight at the FCA, said: 'Barclays ignored its own process designed to safeguard against the risk of financial crime and overlooked obvious red flags to win new business and generate significant revenue. This is wholly unacceptable.

'Firms will be held to account if they fail to minimise financial crime risks appropriately and for this reason the FCA has required Barclays to disgorge its revenue from the transaction.'

The fine levied on the bank comprises the £52.3 million it made from handling the transaction as well as an additional £19.8 million penalty. 

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