A Barclays whistle-blower wrote this note to his boss about potential money laundering in France
Barclays is investigating claims made by its former chief risk officer in France that managers ignored potential anti-money-laundering failures at some of its French branches, a person familiar with the case has told Business Insider.
Philippe Hebert, the former chief risk officer, sent a letter to his boss, Barclays France CEO Tony Blanco, last month informing him that large cash withdrawals weren't flagged and that "lines of defense" against money laundering were failing to catch potential problems.
Hebert revealed that one client made 38 withdrawals at just below the €10,000 ($11,200 or £7,700) limit in the bank's Biarritz branch, and he said "negligence or complicity" from management allowed breaches to go unpunished. Banks in the European Union are required to investigate withdrawals of €10,000 or more.
Barclays said in a statement: "We were already aware of these allegations. We are satisfied that the concerns were already identified and under investigation and action being taken in accordance with our standard processes. All relevant parties are aware."
Business Insider got hold of the letter, dated April 5. Here are some highlights.
Here Hebert begins the letter with: "I am following up the message I sent you on March 3, regarding the mismanagement of tills and the poor handling of this situation by the various control services and lines of defense, even though it carries serious risks of money laundering, especially at branches already known to be a risk (like Biarritz)."
Hebert says he was shut out of an internal investigation that glossed over problems: "With regard to ant-money-laundering, the situation is different to the recent and favorable report by BIA," the Barclays Internal Audit. "I obtained the report, despite not being an addressee, which is contrary to governance rules."
In this extract, Hebert details examples of malpractice at branches: "These withdrawals were repeated (38 times for one client) and always up to the €10,000 limit. Certain clients are opponents of governments under sanction. One is royalty but not tagged as a PEP (politically exposed person)."
Hebert said the failings went on for years and at numerous different branches: "The Alphabondy case at the Champs Elysee branch concerned money laundering in Africa, involving people close to political power and internal fraud. It's astonishing that no alert arose about this from 2007 to 2016. The employee involved was about to become a sales director until a whistleblower revealed what was going on."
Hebert also said employees in France had intentionally sold inappropriate investment products to elderly and vulnerable consumers.
"With regard to the treatment of customers, particularly elderly or vulnerable customers, certain sales forces, encouraged by a finance team that prioritizes revenue and a remuneration system that pushes staff toward crime, without hiding it, targeted the elderly, especially those having treatment," he said.
Hebert lists one particularly bad example that he said ended without a reprimand for the employees involved: "The Antoni case is a significant example of this detestable practice. The 97-year-old client, who died this month, was sold an investment plan that put all his savings at risk and with 6% fees. The complaint by his son cost the bank €60,000, but no sanctions were applied against the salesman and nor was the sale reviewed."
Hebert ends the letter by saying he decided to leave the bank because he was uncomfortable with being forced into a position in which he "had to tell clients and authorities what I know as work in the back office."
The timing is poor for the bank. Barclays is in talks to sell its French retail banking and wealth business to Anacap, a private-equity firm. The network has 74 branches across France, offering current accounts, mortgages, and wealth-management products.
Fines against Barclays for anti-money-laundering failures are starting to rack up. The UK's Financial Conduct Authority hit Barclays with a £72 million ($104 million) fine in November, the largest ever for financial-crime failings, for arranging and executing transactions in 2011 and 2012 for numerous ultra-high-net-worth clients who were "politically exposed persons."