26th Nov 2015 09:21
LONDON (Alliance News) - Barclays PLC on Thursday was fined GBP72.1 million for "poor handling of financial crime risks" in relation to a GBP1.88 billion transaction the bank arranged and executed in 2011 and 2012 for a number of high-net-worth clients.
The clients in question were politically exposed persons, and should therefore have been subjected to tougher due diligence and monitoring, the UK's Financial Conduct Authority said. Despite the higher level of risk indicated by the clients' status as politically exposed persons, the FCA said, Barclays "applied a lower level of due diligence than its policies required for other business relationships of a lower risk profile".
"Barclays did not follow its standard procedures, preferring instead to take on the clients as quickly as possible and thereby generated GBP52.3 million in revenue," the FCA said. The fine imposed included the revenue generated by the transaction, which involved investments in notes backed by underlying warrants and third-party bonds. The FCA did not criticise the clients.
The regulator said the deal was the "largest of its kind" that Barclays had executed for individuals.
"Barclays went to unacceptable lengths to accommodate the clients. Specifically, Barclays did not obtain information that it was required to obtain from the clients to comply with financial crime requirements. Barclays did not do so because it did not wish to inconvenience the clients," the FCA said.
"Barclays agreed to keep details of the transaction strictly confidential, even within the firm, and agreed to indemnify the clients up to GBP37.7 million in the event that it failed to comply with these confidentiality restrictions. Few people knew of the existence and location of the firm's due diligence records which were kept in hard copy and not on Barclays' systems," the FCA said.
The bank noted that the FCA "made no finding that Barclays facilitated any financial crime in relation to the transaction or the clients on whose behalf it was executed".
Barclays said it "cooperated fully with the FCA throughout and continues to apply significant resources and training to ensure compliance with all legal and regulatory requirements".
Shares in Barclays were up 1.2% at 224.15 pence on Thursday morning.
By Samuel Agini; [email protected]; @samuelagini
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