NatWest fined £264.8 million for anti-money laundering failures
The National Westminster Bank Plc (NatWest) prosecution is the FCA's first criminal prosecution under the Money Laundering Regulations.
The FSA statement says:
National Westminster Bank Plc (NatWest) was fined £264,772,619.95 following convictions for three offences of failing to comply with money laundering regulations.
Mrs 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 at Westminster Magistrates Court on 7 October.
This is the first time the FCA has pursued criminal charges for money laundering failings.
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 approximately £365m was deposited with the bank, of which around £264m was in cash.
- Some of the bank's employees, who were responsible for handling these cash deposits, reported their suspicions to bank staff responsible for investigating suspected money laundering, however no appropriate action was ever taken.
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.
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.
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.'
Notes to editors
The fine reflected a discount for the plea of guilty. The figure before 1/3 reduction for plea is £397,156,944.14.
- Sentencing remarks:
- NatWest failed to comply with Money Laundering Regulations (2007).
- The Money Laundering Regulations 2007 came into force on 15 December 2007 and form part of the UK's legislative framework designed to prevent the use of the financial system for the purpose of money laundering and terrorist financing.
- They were superseded by the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
- Full details of the case against NatWest are available in the following agreed Statement of Facts
- National Westminster Bank Plc is a subsidiary of NatWest Group Plc (formerly the Royal Bank of Scotland Group plc).
- Previous press releases: NatWest Plc pleads guilty in criminal proceedings and FCA starts criminal proceedings against NatWest Plc