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Barclays for years treated Stunt & Co, a gold dealership led by British socialite James Stunt, as “low risk” from a financial-crime perspective despite knowing that U.K. authorities suspected the company’s largest commercial partner of laundering tens of millions of pounds.

Those and other mistakes caught up with Barclays on Wednesday, when the Financial Conduct Authority disclosed a penalty of £39 million against the bank, Britain’s second largest by assets, for not conducting sufficient due diligence on the now-defunct dealership in Mayfair, an upscale district of London, from January 2015 to April 2021.

The FCA found that Barclays at no point adequately identified or managed the actual risks of illicit finance posed by Stunt & Co, which eventually became entangled in the government’s high-profile investigation into a £200 million money-laundering operation at Fowler Oldfield, a now-defunct jewelry wholesaler in Northern England.

“By providing banking services to Stunt & Co, Barclays facilitated the movement of funds linked to financial crime,” the agency concluded.

Stunt, the now 43-year-old former son-in-law of Formula One chief Bernie Ecclestone, applied for a corporate account for Stunt & Co in January 2015 after having opened a personal account at Barclays 10 years prior.

A representative of Stunt & Co told Barclays during the onboarding process that the company planned to import, refine and sell gold from West Africa to buyers in the Middle East for an expected annual turnover of £3 million.

Despite the inherently precarious nature of Stunt & Co’s business strategy and geographical footprint, not to mention Stunt’s refusal to satisfy the bank’s inquiries regarding his source of wealth over the months that followed, an unidentified relationship director at Barclays rated the company “low risk” in terms of financial crime.

The director told a know-your-customer manager at Barclays that Stunt & Co’s account required only standard due diligence at the time, according to the FCA, which accused Barclays of not recording why the company did not merit enhanced due diligence.

In October 2015, nine months after opening the corporate account, Stunt & Co told Barclays of an ongoing joint venture with Fowler Oldfield, whose operations would soon fall under suspicion and ultimately bring a second lender, NatWest, into disrepute.

Fowler Oldfield eventually wired nearly £47 million to Stunt & Co’s account at Barclays from July 2015 to August 2016, by then the primary target of a massive money-laundering investigation.

But neither those transactions nor Stunt & Co’s earlier disclosure of the high-risk venture prompted a due-diligence review or risk re-assessment at Barclays, which similarly took no action when authorities informed the lender that August that the London-based dealership had received large sums of cash from the Bradford-based wholesaler.

Even after learning from news reports the following month that police had raided Stunt & Co’s offices in London, Barclays still found that the company’s financial activity aligned with expectations.

Barclays left Stunt & Co’s low-risk rating in place for the next five years despite receiving several production orders, the U.K. equivalent of a subpoena, and requests for information on the company’s account. Save for the period March 2019 to May 2020, when Barclays assessed that Stunt & Co posed a “medium risk,” the lender subjected neither the company nor Stunt to enhanced due diligence.

Resource constraints and a lack of formal policies for handling production orders and other inquiries from law enforcement largely precluded compliance officers from supplying the financial intelligence investigators sought from August 2016 to July 2021.

As a result, analysts tasked with reviewing transactional alerts at Barclays in all likelihood did not know they possibly held details relevant to investigators, the FCA found.

Barclays finally froze Stunt & Co and Stunt’s accounts in August 2018 pursuant to a restraint order and closed them two years later, but did not conduct a transactional lookback or file any suspicious activity reports after learning he had been charged with money laundering.

The bank ultimately waited until March 2021, when the FCA charged NatWest with breaching anti-money laundering regulations by failing to vet Fowler Oldfield, to investigate Stunt & Co and 19 other clients to whom the Bradford-based wholesaler had sent funds.

Nine months later, Southwark Crown Court in London ordered NatWest to pay a then-record penalty of £265 million at the end of an unprecedented criminal prosecution by the FCA.

Fowler Oldfield directors Gregory Frankel, 47, and Daniel Rawson, 48, and two of their associates received prison sentences in March, but jurors accepted Stunt’s claim that he knew nothing of the criminal origin of the funds paid into the accounts he controlled.

The FCA credited Barclays on Wednesday with sharing the results of an internal review of the bank’s exposure to Fowler Oldfield, cooperating with the regulator’s subsequent investigation and investing in significant remediation.

Guy Wilkes, a former enforcement attorney at the FCA, told ACAMS moneylaundering.com that the case against Barclays suggests that the regulator will punish financial institutions not only for systemic breaches, but also for specific violations involving a limited set of accounts.

Barclays did not have a system in place to ensure that those in charge had a “full picture” of customers, said Wilkes, now a partner at Mishcon de Reya in London.

“Information about production orders didn’t make its way to decision-makers when clearly it should have,” Wilkes said.

The FCA fined Barclays an additional £3 million Wednesday for failing to vet and monitor a second corporate client, WealthTek, a now-defunct wealth-management platform in Newcastle, seven months after charging John Dance, the company’s principal partner, with stealing and laundering more than £64 million from clients from 2014 to 2023.

Barclays agreed to open a “client account” for WealthTek in January 2021, when the latter had permission to control, but not hold, money for clients, according to the FCA. The bank waited more than three years to close the account, by which point WealthTek’s clients had deposited £34 million.

“One simple check it could have done was to look at the Financial Services Register before opening the account,” the FCA noted.

Barclays also agreed to make a voluntary payment of £6.3 million to Dance’s victims.

Contact Koos Couvée at kcouvee@acams.org