Challenger bank Metro Bank has been fined £16m by the Financial Conduct Authority for money laundering failings from 2016 to 2020.

It's the second major financial penalty for Metro after it was hit with a £10m fine in 2022 for breaching the Listing Rules by publishing incorrect information to investors.

The latest fine was imposed after the bank failed to monitor more than 60 million transactions with a value of more than £61bn, according to the FCA.

Metro automated the monitoring of customer transactions for potential financial crime in June 2016. However, its system did not work as the bank hoped.

An error in how data was fed into the system meant transactions taking place on the same day an account was opened, and any further transactions until the account record was updated, were not monitored. 

Junior staff raised concerns about some transaction data not being monitored in 2017 and 2018, but their concerns were ignored and the issue was not identified and fixed, the regulator said.

Even once a fix had been put in place in July 2019, Metro did not have a mechanism to consistently check that all relevant transactions were being fed into the monitoring system until December 2020, more than four and a half years after the system had been implemented. 

Therese Chambers, joint executive director of enforcement and market oversight, commented: “Metro's failings risked a gap being left in our defence against the criminal misuse of our financial system. Those failings went on for too long.”

After the bank identified the issues with its transaction monitoring system in April 2019, it put in place processes to remediate the issues identified.

It would have been fined £23.8m but agreed to resolve the matters and so qualified for a 30% discount, the regulator said.

Metro Bank has 76 branches in the UK and 2.7 million customers and earlier this year announced a round of heavy cost-cutting which saw it axe 1,000 jobs.