Nationwide Building Society was fined £44m by the Financial Conduct Authority (FCA) for having poor anti-financial crime controls between October 2016 and July 2021.
During this time, Nationwide’s systems failed to keep customer checks up to date and did not properly monitor transactions.
Some customers used personal accounts for business activity, which broke Nationwide’s own terms.
Nationwide did not offer business current accounts at the time and did not have the right processes to manage the risks from business use.
Additionally, Nationwide could not properly spot or deal with money laundering risks among personal current account holders and did not have a clear view of customers at higher risk of financial crime.
One case involved a customer who used personal accounts to take fraudulent Covid furlough payments.
The customer received 24 payments worth £27.3m over 13 months, with £26.01m paid in over eight days.
HM Revenue & Customs (HMRC) recovered £26.5m but about £800,000 was not recovered.
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.”
A spokesperson for Nationwide Building Society said: “Nationwide identified these issues, which relate to controls in place before July 2021, through its own reviews, and voluntarily brought them to the attention of the FCA.
“The Society cooperated fully with the FCA investigation, and we are sorry that our controls during the period fell below the high standards we expect.
“Since 2021, Nationwide has invested significantly in all aspects of its economic crime control framework in order to ensure our systems are robust.
“We do not believe that these controls 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.”
