Nationwide Building Society has been hit with a £44-million fine by the UK’s financial regulator over longstanding weaknesses in its systems to detect and prevent financial crime, including failures that allowed tens of millions of pounds in fraudulent Covid furlough payments to pass through a customer’s account.
The Financial Conduct Authority (FCA) found that from late 2016 to mid-2021, Nationwide did not adequately address known defects in the way it monitored transactions across millions of personal current accounts. The shortcomings left the lender exposed to misuse by customers running business activity through personal accounts and contributed to its failure to identify large-scale abuse of the government’s pandemic furlough scheme.
In one case highlighted by the FCA, a Nationwide customer allegedly received about £27.3 million in bogus furlough payments into a personal account, including around £26 million over just eight days. Roughly £800,000 of that money was then moved on and has not been recovered.
The rest was clawed back after HM Revenue & Customs spotted the suspicious activity weeks before Nationwide did.
“Nationwide failed to get a proper grip of the financial-crime risks lurking within its customer base,” said Theresa Chambers, the FCA’s joint executive director of enforcement and market oversight, in a statement. “It took too long to address its flawed systems and weak controls, meaning red flags were missed with serious consequences.”
Read more the FCA Final Notice here