Britain Fines Metro Bank $20 Million for Control Failures

Britain's financial watchdog has fined Metro Bank $20 million for failing to maintain adequate control systems. The penalty was imposed after the bank was found to have significant shortcomings in its internal processes, which could have led to serious regulatory risks. This fine emphasizes the importance of robust control measures in maintaining financial stability and compliance within the banking sector.

Britain's Financial Conduct Authority (FCA) has imposed a £16 million ($20.51 million) fine on Metro Bank (MTRO.L) for failing to meet anti-money laundering standards, marking another setback for the troubled mid-sized bank.

The bank lacked sufficient systems and controls to properly monitor over 60 million transactions, totaling more than £51 billion, for money laundering risks from 2016 to 2020, according to the FCA.

Launched in 2010 to challenge Britain’s dominant banks, Metro Bank has faced difficulties in recent years, culminating in a rescue deal last October. However, it has shown signs of recovery, with a return to profitability expected in the fourth quarter.

The FCA noted that Metro Bank has implemented corrective measures since identifying the issues.

In early trading on Tuesday, Metro Bank shares dropped by 3%, compared to a 0.5% decline in the FTSE 100 index (.FTSE), though they have risen 128% year-to-date as part of its recovery.

Therese Chambers, FCA's joint executive director of enforcement and market oversight, stated that Metro's failures threatened the UK's defense against financial crime, with the issue persisting for too long.

Despite automating its transaction monitoring systems in 2016, the FCA said the system was ineffective, and transactions made on the same day an account was opened were not monitored.

Daniel Frumkin, CEO of Metro Bank, said that resolving these issues allows the bank to focus on future growth and build on its solid foundation.

Metro Bank’s third-quarter trading update indicated that the bank expects to meet its performance forecasts for the year.

Frumkin added that Metro Bank has shifted its focus to higher-yielding specialist mortgages and commercial lending.

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