Following convictions for three offenses of failing to comply with money laundering regulations, the National Westminster Bank Plc was fined £264,772,619.95, the FCA has announced.
The UK regulator noted that this is the first time it has pursued criminal charges for money laundering failings.
Justice Cockerill, the sentencing judge at Southwark Crown Court, today said:
….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.
NatWest pleaded guilty on these charges on 7 October.
According to FCA, NatWest failed to properly monitor the activity of a Fowler Oldfield, a Bradford-based jewellery business that was a commercial customer of the bank at the time. The monitoring failures occurred during the period between 8 November 2012 and 23 June 2016. NatWest initially understood it would not handle cash from this business, when it first onboarded them as a client. However, during the course of their business relationship, £365 million was deposited with the bank, of which around £264 million was in cash.
Some of NatWest’s employees who handled these cash deposits shared their suspicions with the bank’s investigative staff but no action was taken. The warning signs included large amounts of Scottish bank notes deposited throughout England, as well as deposits of notes carrying a noticeable musty smell and individuals acting suspiciously when depositing the cash.
Moreover, another significant monitoring gap was that the bank’s automated transaction monitoring system incorrectly accepted some cash deposits as cheque which carry a lower money laundering risk.
In a separate investigation, 11 people pleading guilty to charges connected to these cash deposits and three cash couriers were charged. Another 13 individuals are awaiting trial in relation to the activities of Fowler Oldfield.
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.
