Legal

UK Watchdog Fines NatWest £264.7 Million For AML Failings

Editorial Staff, 14 December 2021

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In its summary of the case, the FCA said that some of the bank’s employees, who were in charge of handling these cash deposits, reported their suspicions to bank staff responsible for investigating suspected money laundering, however no appropriate action was ever taken.

The UK’s Financial Conduct Authority yesterday fined NatWest £264.7 million ($350.17 million) after the lender was convicted of three offences of not following anti-money laundering rules.

On 7 October, NatWest pleaded guilty at Westminster Magistrates Court to criminal charges for the failings. 

“It must be borne in mind that although in no way complicit in the money laundering which took place, the bank was functionally vital. Without the bank – and without the bank’s failures – the money could not be effectively laundered,” Mrs Justice Cockerill, the sentencing judge at Southwark Crown Court, said. 

The charges covered NatWest’s failure to properly monitor the activity of a commercial customer, Fowler Oldfield, a jewellery business based in Bradford, between 8 November 2012 to 23 June 2016. When taking on the customer, NatWest initially understood it would not handle cash from the Fowler Oldfield business.

However, over the course of the customer relationship about £365 million was deposited with the bank, of which around £264 million was in cash, a statement from the FCA said.

Some of the bank’s employees, who handled these cash deposits, reported their suspicions to bank staff responsible for investigating suspected money laundering, however no appropriate action was ever taken, the FCA statement continued. The “red flags” that were reported included significant amounts of Scottish bank notes deposited throughout England, deposits of notes carrying a prominent musty smell, and individuals acting suspiciously when depositing cash in NatWest branches. 

In addition, the bank’s automated transaction monitoring system incorrectly recognised some cash deposits as cheque deposits. As cheques carry a lower money laundering risk than cash, this was a significant gap in the bank’s monitoring of a large number of customers depositing cash, of which Fowler Oldfield was one, the statement continued.

A separate investigation by West Yorkshire Police has led to 11 people pleading guilty to charges relating to the cash deposits and three cash couriers being charged. A further 13 individuals are awaiting trial at Leeds Crown Court on 25 April 2022 in relation to the activities of Fowler Oldfield. 

“NatWest is responsible for a catalogue of failures in the way it monitored and scrutinised transactions that were self-evidently suspicious. Combined with serious systems failures, like the treatment of cash deposits as cheques, these failures created an open door for money laundering,” Mark Steward, executive director of enforcement and market oversight at the FCA, said. 

“Anti-money laundering controls are a vital part of the fight against serious crime, like drug trafficking, and such failures are intolerable ones that let down the whole community, which, in this case, justified the FCA’s first criminal prosecution under the money laundering regulations.” 

“Today's hearing brings an end to the case against NatWest and the FCA has confirmed that, provided no further evidence comes to light, it will not take action against any individual current or former employee of NatWest in respect of this case. NatWest is not aware of, and is not anticipating, any other authority investigating its conduct in this matter,” NatWest said in a statement. 
 
NatWest CEO, Alison Rose, said: "NatWest takes its responsibility to prevent and detect financial crime extremely seriously. We deeply regret that we failed to adequately monitor one of our customers between 2012 and 2016 for the purpose of preventing money laundering. While today's hearing brings an end to this case, we will continue to invest significant resources in the ongoing fight against financial crime."

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