Metro Bank is undergoing a major review of its compliance controls after the lender handled money from Iran and Cuba, breaching strict US and EU sanctions.
The review is being carried out by law firm DLA Piper. Metro Bank hired the firm after receiving the funds from Iran last year. The bank previously notified US officials of the Cuba breach in November 2017.
The probe, first reported by the Evening Standard, is the latest in a series of woes for the challenger bank, which has struggled to regain investor confidence since disclosing a major accounting error at the start of last year.
The embattled lender also was forced to ditch a £250m bond issue in October following a lack of demand from investors.
Metro had admitted to the sanctions breaches in a 200-page fundraising prospectus issued in September, which contained a four-sentence description on page 32. When approached for comment by City A.M., the bank refused to give further details beyond the original statement.
In the statement, the lender said it discovered that a “UK-based entity with which it had a banking relationship was subject to US sanctions relating to Cuba”. Metro said it ended its relationship with the entity in response, and reported itself to the US Office of Foreign Assets Control (OFAC).
Metro Bank also said that last year it discovered a payment to one of its customer accounts from a UK-based financial institution “had been routed to the UK-based financial institution from Iran”.
“A review of the foregoing matters, together with a review of Metro Bank’s sanctions compliance policies, has been initiated by Metro Bank with the support of external advisers.”
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Shares in Metro Bank fell as much as 4.03 per cent following news of the probe.
It is believed DLA Piper’s investigation is at a fairly advanced stance, and is examining whether there were other breaches, the Standard reported.
City A.M. has contacted DLA Piper and OFAC for comment.