Barclays reputedly being probed by the Financial Conduct Authority

Barclays is reportedly being investigated by the Financial Conduct Authority over alleged shortcomings in its compliance and anti-money laundering procedures.

The financial services regulator asked for an independent review of the bank’s systems last year after noticing a high volume of money laundering and so-called ‘know your customer’ incidents, according to the Financial Times.

Know your customer guidelines are mandatory requirements for financial institutions to check clients’ identity and risk factors whenever a new account is opened.

They are designed to prevent the concealment of proceeds earned through criminal activity, such as drug trafficking, bank robberies and corruption.

The FT reported on Friday that the FCA had written to Barclays’ UK retail and wealth and corporate banking bosses requesting a ‘skilled persons review,’ citing people with knowledge of the matter.

Also known as a ‘Section 166’, such a review typically involves an outside party, like a legal or accountancy firm, conducting a probe of issues raised by authorities and highlighting any activities that may be cause for concern.

Depending on what such an inquiry uncovers, the FCA can then decide whether or not to take enforcement action, which happens only in a minority of cases.

The financial regulator has brought several high-profile money laundering and compliance cases in recent years as it seek to shake off a reputation for being too weak to deal with financial crimes.

It fined British banking giants NatWest and HSBC £264.8million and £63.9million, respectively, in December 2021 for failures in their anti-money laundering controls.

Enforcer: The Financial Conduct Authority has brought several high-profile money laundering and compliance cases against British banks in recent years

In NatWest’s case, the group admitted to receiving £365million – some of it deposited in black bin liners – from the defunct Bradford-based gold dealership Fowler Oldfield over a four-year period.

More recently, the FCA levied a £107.7million penalty against Santander after finding improper checks at the high street lender’s business banking operations.

Barclays has also been sanctioned numerous times by the regulator, including twice in 2015, when it paid the largest fine in FCA history, £284million, for inadequate controls at its foreign exchange (FX) business.

Since then, it has had to make payouts for, among other things, soliciting investment from Qatar without telling investors, wrongly selling timeshare loans in Malta and overselling £11.5billion of structured financial products in the US.

These blunders have contributed to a slowdown in Barclays’ revenue and earnings growth during the past year, as has a drop in mergers and acquisitions activity amid significantly elevated economic uncertainty.

On Wednesday, the FTSE 100 company will report its annual results, with analysts predicting Barclays will post £4.9billion in attributable profit, compared to £6.4billion the previous year. 

This is despite them expecting the group’s income to surge by about £3.3billion due to successive interest rate hikes by the Bank of England and other global central banks, mortgage transactions, and consumer card spending. 

Both the FCA and Barclays were approached for comment by This is Money but declined. 

Barclays shares were 2.1 per cent lower at 185.6p on late Friday afternoon, although their value has increased by 14 per cent so far this year.