In a Final Notice issued on 25 November 2015, Barclays was fined £72,069,400 (Stage 1: 30% discount: breach of Principle 2). This fine comprises disgorgement of £52,300,000, which represents the revenue Barclays generated from the transaction and was not subject to the stage 1 discount, and a penalty of £19,769,400.
The fine related to a £1.88 billion transaction that Barclays arranged during 2011 and 2012 for a number of ultra-high net worth politically exposed persons. The Financial Conduct Authority (FCA) found that Barclays did not appropriately assess, manage or monitor the financial crime risks that were associated with the transaction. In particular, the FCA concluded that Barclays did not adhere to the standard procedures it would normally follow for establishing relationships with ‘sensitive’ politically exposed persons, or put acceptable alternative procedures in their place. Rather, Barclays applied a “less robust process” than it would have done for its other business relationships, that had a lower risk profile. The FCA also determined that Barclays failed to carry out due diligence checks aimed at adequately establishing the purpose and nature of the transaction and sufficiently corroborating its clients’ sources of wealth and funds for that transaction.
This represents the largest fine imposed by the FCA, so far, for financial crime failings. In the Final Notice, the FCA warned that “Firms must take particular care and undertake additional due diligence when establishing businesses relationships with PEPs.”