Nationwide Building Society has been fined £44 million by the UK Financial Conduct Authority (FCA) after regulators concluded that the lender failed for several years to adequately manage financial crime risks within its customer base. The penalty relates to weaknesses in Nationwide’s anti-financial crime systems and controls between October 2016 and July 2021, a period during which the institution did not effectively identify or monitor higher-risk activity.

According to the FCA, Nationwide’s systems for customer due diligence, risk assessment and transaction monitoring were insufficient, particularly across its personal current account portfolio. As a result,customers were able to misuse personal accounts for business-related activity without detection, despite this breaching Nationwide’s own terms and conditions. At the time, the building society did not offer business current accounts, meaning it lacked appropriate processes to assess and mitigate the money-laundering risks associated with commercial transactions.

These systemic shortcomings had tangible consequences. The FCA found that Nationwide missed multiple warning signs linked to fraudulent activity, including a major case involving abuse of the UK government’s Covid furlough scheme. One customer was able to receive 24 fraudulent furlough payments totalling £27.3 million over a 13-month period, with more than £26 million paid into accounts within just eight days. While His Majesty’s Revenue & Customs ultimately recovered £26.5 million, around £800,000 remains unrecovered.

Regulators concluded that Nationwide did not maintain an accurate understanding of which customers posed elevated financial crime risks, limiting its ability to prevent, detect or respond to money laundering and fraud. The FCA noted that the building society was slow to address known deficiencies, allowing flawed systems and weak controls to persist for years.

Therese Chambers, the FCA’s Joint Executive Director of Enforcement and Market Oversight, said the case demonstrated a failure to properly grasp the financial crime risks embedded within Nationwide’s customer base. She emphasised that banks and building societies play a central role in protecting the financial system and must remain proactive and vigilant in identifying suspicious activity.

Nationwide has acknowledged the regulator’s findings and stated that it has since strengthened its financial crime framework. The case serves as a clear warning to UK financial institutions that prolonged weaknesses in anti-money laundering controls can lead not only to significant regulatory penalties, but also to serious public harm when criminal activity goes undetected.