Barclays Fined for Lax Crime Checks in ‘Deal of Century’

Britain’s financial watchdog has fined Barclays 72 million pounds ($109 million) for cutting corners in vetting wealthy customers in order to win a huge transaction described by one senior manager as potentially the “deal of the century.”

Barclays arranged the 1.9 billion pound transaction in 2011 and 2012 for a number of rich clients deemed by the regulator to be politically exposed persons (PEPs), or people holding prominent positions that could be open to financial abuse.

That should require a bank to conduct more detailed checks on them, but Barclays failed to do so and in fact cut corners with its compliance procedures, Britain’s Financial Conduct Authority (FCA) said in a damning report on Thursday.

“Barclays did not follow its standard procedures, preferring instead to take on the clients as quickly as possible and thereby generated 52.3 million pounds in revenue,” the FCA said.

It said the bank took unusual steps to keep the details of the clients and the transaction off its computer system, where it would normally be recorded.

These included buying a safe specifically for storing some documents relating to the clients and agreeing to pay the clients 37.7 million pounds if their names were ever revealed.

“Barclays went to significant lengths to accommodate the client to ensure that it won their business,” the FCA said in a 37-page notice on the bank’s failings.

“Barclays’ approach was to request information only if it was absolutely necessary and did not want to ‘irritate’ the clients with multiple requests,” it added.

Just over 52 million pounds of the penalty comprised disgorgement, meaning clawing back the profit Barclays made on the transaction. That is the largest disgorgement penalty ever imposed by the FCA.

This article appeared in print on page 9 of the November 27th, 2015 edition of Hamodia.