The Financial Services Authority has fined Goldman Sachs £20m after the investment bank failed to tell the regulator a member of staff at the centre of fraud charges in the US was working in the UK.

Goldman agreed to pay the fine, one of the heaviest levied by the FSA, after it admitted it made a mistake when it failed to keep the UK regulator informed of an investigation by the Securities and Exchange Commission in New York.

Goldman and the FSA declined to comment last night, but it is understood that officials at the FSA were kept in the dark for several weeks.

The fine will further embarrass the firm which once boasted of staff as Masters of the Universe who dominated Wall Street, but has more recently laboured under the less flattering title of "a great vampire squid wrapped around the face of humanity".

Goldman's boss, Lloyd Blankfein, who earlier this year said he was doing "God's work", has come under severe criticism for using aggressive tactics against rivals and customers.

It was accused by Greek officials of profiteering from the country's sovereign debt crisis after Athens accused it of short selling its bonds.

The investment bank was also accused of designing a series of complex derivatives to help the previous Greek government hide much of its debts from EU regulators.

Earlier this year it faced charges concerning the bank's marketing of complex mortgage investments, just as the US housing market faltered.

It was accused of selling a product that favoured one client to the detriment of others and denying clients crucial information.

The SEC identified Frenchman Fabrice Tourre as the trader who helped to create the mortgage derivatives, and placed him under investigation.

In July, Goldman settled the fraud charge with the SEC by paying $550m (£356m) after it agreed without accepting liability that some marketing literature was poorly designed and may not have presented a complete picture to clients.

Goldman agreed to pay the US fine to settle civil fraud charges against the firm of misleading investors.

The FSA argued Goldman also did not tell them that Tourre was under investigation, which was considered important information as Tourre came under the auspices of the UK regulator after he moved from the US to London.

Goldman angered the Obama administration after it refused to accept any responsibility for the financial crash and resulting banking crisis.

It was forced to accept government cash, along with several Wall Street banks to prevent a loss of confidence in the sector after the Lehman Brothers crash.

In the first quarter of the year it announced record breaking profits and insiders said they expected bonuses to exceed the figures posted in the boom years.

The bank made a profit of $3.5bn in the first three months of this year. The bumper profit figures appeared not long after the SEC charged Goldman with civil fraud charges.

The SEC said Goldman failed to disclose "vital information" that one of its clients, Paulson & Co, helped to choose which securities were packaged into a mortgage portfolio that was then sold to investors in 2007.

It claimed Goldman did not disclose that Paulson, one of the world's largest hedge funds, had bet that the value of the securities would fall.

The SEC argued that investors in the mortgage securities, including Royal Bank of Scotland, lost more than $1bn (£646m) in the US housing market collapse.

In paying the SEC fine, Goldman did not admit legal wrongdoing but acknowledged that its marketing material for Abacus contained "incomplete information".

Several analysts predicted Goldman could face a life threatening fine and considered the bank got off lightly.