NatWest fined nearly £250m after criminal charges for money laundering
“It must be borne in mind that although in no way complicit in the money laundering which took place, the Bank was functionally vital.”
The UK Financial Conduct Authority has pursued criminal charges for money laundering failings against National Westminster Bank Plc (NatWest). The bank pleaded guilty at Westminster Magistrates Court on 7 October.
As part of the sentence, NatWest was fined £264,772,619.95 – a figure close to £250 million – following convictions for three offenses of failing to comply with money laundering regulations.
NatWest was “in no way complicit”
The UK financial watchdog charged 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.
The bank took on the customer and allowed the business to deposit approximately £365 million, of which around £264m was in cash, over the course of the relationship, although it was not meant to handle cash from Fowler Oldfield.
“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”, said Mrs Justice Cockerill, the sentencing judge at Southwark Crown Court.
The bank did nothing despite the many “red flags” reported by employees who were responsible for handling these cash deposits.
They had reported their suspicions to bank staff responsible for investigating suspected money laundering, however, no appropriate action was ever taken.
“Red flags” 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 FCA stated.
NatWest is responsible for a catalogue of failures
Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said: ‘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.
“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”.
In the meantime, the West Yorkshire Police captured 11 people involved in those cash deposits as well as three cash couriers. A further 13 individuals are awaiting trial at Leeds Crown Court in relation to the activities of Fowler Oldfield.