(Credit: George Iordanov-Nalbantov)

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 £27.3m over 13 months, with £26.01m of this deposited over 8 days. His Majesty’s Revenue & Customs (HMRC) recovered £26.5m, but approximately £800,000 remains unrecovered.

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.

“Building societies and banks have a key role in the fight against financial crime. Firms must remain vigilant in this fight.”

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 programme in July 2021.