Money laundering, and its links to organised crime, is a serious global problem that banks find themselves at the centre of, with their failures to spot suspicious activity partly to blame for the high volumes and value of money cleaned by criminals in the UK.
In October, NatWest Bank admitted that operational failures, including weaknesses in automated monitoring systems, meant that it failed to prevent the money laundering of £400m. It pleaded guilty at Westminster Magistrates’ Court to failing to comply with anti-money laundering regulations between 2012 and 2016.
Following the admission, the bank’s CEO, Alison Rose, said: “In the years since this case, we have invested significant resources and continue to enhance our efforts to effectively combat financial crime.”
Technology is key to reducing money laundering, with systems using technology such as artificial intelligence scanning transactions and highlighting suspicious activity.
Tim Barnett, CEO at Credas Technologies said: “The practice of money laundering is as old as the hills; it’s one area of criminal activity that is incredibly tricky to eradicate as it can be done in such a vast and varied number of ways.”
“It’s also a practice that continues to evolve with the times, and in more recent years we’ve seen criminals utilise online banking, cryptocurrencies and, most recently, NFT marketplaces, in order to wash dirty cash.”
Financial Conduct Authority regulations mean finance firms must have adequate anti-money laundering systems and controls in place. Anti-money laundering software automates the monitoring of suspicious activity being carried out on a bank’s network.
In Germany, neo bank N26 was fined €4.25m by the German financial services regulator for weak anti-money laundering practices related to the late filing of about 50 suspicious activity reports in 2019 and 2020.
But there have been some much higher fines. Swedbank was fined €347m by regulators in Sweden and Estonia in 2020 for breaching money laundering laws, Dutch bank ING was fined €775m in 2018 for failing to prevent the laundering of hundreds of millions of euros between 2010 and 2016, and in 2017, Citigroup agreed to pay almost $100m and admitted criminal violations as it settled an investigation into breaches of anti-money laundering rules involving money transfers between the US and Mexico.