Barclays fined £72m over risks in £1.88bn transaction for wealthy clients

General view of a branch of Barclays bank in Leicester. Picture date: Tuesday February 5, 2013. Pho

General view of a branch of Barclays bank in Leicester. Picture date: Tuesday February 5, 2013. Photo: Joe Giddens/PA Wire - Credit: PA

Banking giant Barclays has been fined £72 million by the City watchdog for failing to handle potential financial crime risks relating to a £1.88 billion transaction for ultra high-net-worth clients.

The Financial Conduct Authority (FCA) said the clients were 'politically exposed persons' and should have been subject to extra checks and monitoring.

The FCA found Barclays used a lower level of due diligence and did not follow standard policies, and accused the bank of seeking to take on the clients as quickly as possible to make £52.3 million in revenues and of keeping the deal confidential.

The fine is the largest levied by UK regulators for financial crime failings.

While the FCA said the deal did not involve any financial crime, the nature of the transaction and people involved should have flagged up the need for extra checks within Barclays.


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It added that the bank went to 'unacceptable lengths to accommodate the clients', failing to ask for key information as it 'did not wish to inconvenience' them.

Barclays agreed keep details of the transaction under wraps even within the firm, agreeing to a clause that would see the clients paid £37.7 million if they failed to comply with the confidentiality agreement.

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The bank did not keep records of its due diligence relating to the transaction on any of its systems, instead keeping only hard copies, with few people aware of their existence or location, according to the FCA.

It added this meant Barclays was unable to respond to the FCA's request for information promptly.

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.

The fine was reduced by 30pc, otherwise Barclays would have paid £80.5 million.

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.'

The transaction - referred to by the bank as an 'elephant deal' due to its size - was arranged and completed in 2011 and 2012, just before the bank became embroiled in the Libor interbank rate-rigging scandal, which claimed the scalp of its former boss Bob Diamond and threw the lender into a reputational crisis.

The FCA's report revealed that Barclays even bought a safe specifically to store the hard copies relating to the deal.

Barclays stressed that the FCA made no finding of financial crime relating to the transaction or the clients.

It added: 'Barclays has co-operated fully with the FCA throughout and continues to apply significant resources and training to ensure compliance with all legal and regulatory requirements.'

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