NatWest Bank has booked a £294 million (US$402 million) litigation charge in its quarterly results released 29 October to pay for anti-money laundering (AML) failures that led to censure from the UK’s Financial Conduct Authority (FCA). A huge fine is in prospect.
The bank in which the UK taxpayer holds a substantial stake nevertheless announced profits of £1.1 billion for the third quarter, significantly beyond market expectations.
First prosecution
Earlier in October NatWest admitted failing to comply with AML regulations after the FCA brought its first ever criminal prosecution under UK money laundering regulations and used those rules for the first time to prosecute a bank. The FCA has been criticised for its lack of prosecutions.
The FCA has confirmed that it will not take action against any individual current or former employee of NatWest. The bank has said it is not aware of, and is not anticipating, any other authority investigating its conduct in this matter.
AML breaches
NatWest admitted failing to adhere to requirements of three regulations between 2012 and 2016. These regulations required the bank to determine, conduct and demonstrate risk sensitive due diligence and ongoing monitoring of its relationships with its customers for the purposes of preventing money laundering.
The bank failed to meet these requirements when it allowed a customer to deposit around £365 million into the client’s accounts, of which around £264 million was in cash. NatWest’s systems and controls failed to adequately monitor and scrutinise this activity (Trade-based Financial Crime, 29 March 2021).
Focus on financial crime
NatWest says it has invested almost £700 million in the last five years to improve its AML systems, including upgrades to transaction monitoring systems, automated customer screening and new customer due diligence solutions.
The bank says it now has more than 5,000 staff in specialist financial crime roles, dedicated to detecting and preventing financial crime under the leadership and focus of a centralised bank-wide ‘FinCrime Hub’ which was established earlier this year.
Working in partnership
NatWest says it is also working in partnership with industry bodies, law enforcement, regulators and government to tackle and reduce financial crime.
These partnerships include the Joint Money Laundering Intelligence Taskforce, Joint Fraud Taskforce and various Transparency International groups.
Categories: Trade Based Financial crimes News
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