The £72m ($108.7m, €102.2m) fine relates to a £1.88bn transaction that Barclays arranged and executed in 2011 and 2012 for a number of ultra-high-net-worth clients.
The clients involved were politically exposed persons (PEPs) who should have been subject to enhanced levels of due diligence and monitoring.
No indication of financial crime
The FCA found no indication that the transaction, in fact, involved financial crime. However, the circumstances surrounding the transaction and the PEP status of the clients involved indicated a higher level of risk.
The fine relates to Barclays’ failure to adhere to higher levels of due skill, care, and diligence when carrying out the transaction. The bank did not follow its standard procedures, opting instead to take on the clients as quickly as possible and generate £52.3m in revenue.
The transaction involved investment in notes backed by underlying warrants and third party bonds; and was the largest transaction of its kind executed by Barclays for individuals.
Record fine
The fine comprises the £52.3m Barclays generated in revenue plus a penalty of nearly £19.8m, the largest fine that has been imposed by the FCA and its predecessor the Financial Services Authority (FSA) for financial crime failings.
The FCA found that Barclays had gone to unacceptable lengths to accommodate the clients, failing to obtain information that it was required to obtain to comply with financial crime requirements.
Barclays also agreed to keep details of the transaction strictly confidential, even within the firm, and agreed to indemnify the clients up to £37.7m in the event that it failed to comply with these restrictions.
“Wholly unacceptable”
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 and for this reason the FCA has required Barclays to disgorge its revenue from the transaction.”
