Five of the world's biggest banks are to pay fines totalling £2 billion after regulators today lifted the lid on the latest scandal to rock the industry.

The penalties from three bodies including the UK's Financial Conduct Authority (FCA) relate to the rigging of the £3 trillion-a-day foreign exchange (forex) markets, adding to the large sums already collected over Libor fixing.

The FCA has issued record fines worth £1.1 billion on five banks for failing to control business practices in their foreign exchange trading operations.

They include state-backed Royal Bank of Scotland, which has been fined £217 million by the FCA as well as 290 million US dollars (£182 million) by the US Commodity Futures Trading Commission (CFTC).

The others involved in the settlement are Citibank, HSBC, JPMorgan Chase and UBS. Barclays said it continues to hold discussions with regulators.

The FCA penalties dwarf the £532 million imposed by the regulator on banks and City brokers over the previous big regulatory scandal involving the manipulation of the interbank lending rate, Libor.

The FCA said traders at different banks formed tight-knit groups in which information was shared about client activity, including using code names to identify clients without naming them.

Names given to these groups included "the players", "the 3 musketeers", "1 team, 1 dream", "a co-operative" and "the A-team". Traders shared the information obtained through these groups to help them work out their trading strategies.

FCA chief executive Martin Wheatley said: "Today's record fines mark the gravity of the failings we found and firms need to take responsibility for putting it right.

"They must make sure their traders do not game the system to boost profits or leave the ethics of their conduct to compliance to worry about."

An inquiry by the Bank of England found that no official was involved in any unlawful or improper behaviour in the forex market.

However one member of staff was aware that bank traders were sharing information about client orders for the purpose of "matching" - a practice that can increase the potential for improper conduct - but did not raise the alarm to superiors.

The Bank of England's review, carried out by Lord Grabiner, extracted and applied search terms to 1.8 million documents and reviewed nearly 66,000 documents and 87,000 telephone calls.

RBS said it has placed six individuals into a disciplinary process, three of whom are currently suspended, pending further investigation.

It said it has analysed millions of documents and is reviewing the conduct of more than 50 current and former members of trading staff around the world as well as dozens of supervisors and senior management.

RBS chairman Sir Philip Hampton said: "The RBS board fully accepts the criticisms within today's announcements and condemns the actions of those employees responsible for this misconduct.

"Today is a stark reminder of the importance of culture and integrity in banking and we will rightly be judged on the strength of our response."

The latest fines facing banks come in the wake of the Libor scandal which saw them pay billions of pounds in penalties.

In Britain, the Financial Conduct Authority (FCA) and its predecessor have handed out £532 million in penalties to seven firms over the affair, with US and other regulators imposing billions more.

Much of the money in the UK has been allocated to charities including military groups.

The scandal related to the manipulation of the London Inter-Bank Offered Rate used for hundreds of trillions of dollars of loans and transactions around the world from complex derivatives to mortgages.

Barclays, whose involvement in the affair precipitated the departure of chief executive Bob Diamond, was the first to settle rate-rigging claims, paying £290 million in penalties to US and UK regulators in June 2012.

This included a £59.5 million fine from the Financial Services Authority (FSA)

Switzerland's UBS was fined £940 million in December 2012 including a £160 million penalty from the FSA - the highest UK Libor fine.

In February 2013, state-backed Royal Bank of Scotland was fined £87.5 million by the FSA over Libor as part of global penalties totalling £391 million.

City broker ICAP was handed penalties totalling £54 million in September last year, including £14 million from the FCA.

Dutch lender Rabobank paid out £663 million in October 2013 to authorities in the US, the Netherlands and the UK - where it settled for £105 million with the FCA.

In May this year, City broker RP Martin was fined £1.3 million including £630,000 for the UK regulator.

The most recent fine for Libor-related failures was handed to state-backed Lloyds Banking Group in July this year. The settlement totalled £218 million, including £105 million for the FCA.

Last December, banks separately faced a 1.7 billion euro (£1.4 billion) settlement with European regulators over the alleged manipulation of Yen Libor and Euribor - the Tokyo and euro area equivalents of Libor.

RBS was handed a penalty of 391 million euros (£325 million) but Barclays was immune from a potential 690 million euro (£573 million) penalty after blowing the whistle on the Euribor cartel.

Deutsche Bank, Societe Generale, RBS, JP Morgan, Citigroup and RP Martin were also involved in the settlement while UBS avoided a 2.5 billion euro (£2.1 billion) after flagging up the Yen Libor cartel.