Nationwide has been fined £44m for failing to do enough to combat financial crime.
The Financial Conduct Authority (FCA) issued the penalty after criticising the building society’s “inadequate” efforts at tackling offences such as money laundering.
The regulator said this included Nationwide having ineffective policies and procedures for monitoring personal current accounts.
The fine relates to failures during the period between October 2016 and July 2021.
The FCA said that in one “serious” case, the building society missed opportunities to spot how a customer was using current accounts to receive millions of pounds in fraudulent COVID furlough payments during the pandemic.
They were sent 24 payments totalling £27.3m over 13 months, including £26m deposited over eight days.
HMRC managed to claw back most of the cash, but approximately £800,000 remains unrecovered.
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The FAC said Nationwide had been aware that some customers had been “using their personal accounts for business activity, in breach of its terms”.
It added: “Nationwide did not offer business current accounts at this point, so did not have the right processes in place to manage the financial crime risks from business activity.”
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Therese Chambers, an FCA director, said: “Nationwide failed to get a proper grip of the financial crime risks lurking within its customer base. It took too long to address its flawed systems and weak controls, meaning red flags were missed with serious consequences.
“Building societies and banks have a key role in the fight against financial crime. Firms must remain vigilant in this fight.”
A Nationwide spokesperson told Sky News: “Nationwide identified these issues, which relate to controls in place before July 2021, through its own reviews, and voluntarily brought them to the attention of the FCA.
“The society cooperated fully with the FCA investigation, and we are sorry that our controls during the period fell below the high standards we expect.
“Since 2021, Nationwide has invested significantly in all aspects of its economic crime control framework in order to ensure our systems are robust.”
They added: “We do not believe that these controls issues caused financial loss to any of our customers and remain committed to preventing economic crime and protecting our customers and the wider UK economy from fraud.”
The penalty is the latest in a string of fines handed out over financial crime failures by the FCA in recent years.
In December 2022, the regulator fined Santander UK £107.8m for “repeated money-laundering failures”, while in November 2024 Metro Bank was issued with a £16m penalty for similar reasons.
