National Westminster Bank (NatWest) has been fined £264.8 million (US$349.4 million) following convictions for three offences of failing to comply with money laundering regulations.
The bank pleaded guilty to the charges earlier this year in the first ever case in which the UK’s Financial Conduct Authority (FCA) pursued criminal charges for money laundering failings (Trade-based Financial Crime, 1 November 2021).
“Without the bank – and without the bank’s failures – the money could not be effectively laundered”, judge Sara Cockerill concluded at the sentencing last week.
The charges covered NatWest’s failure to properly monitor the activity of a Bradford-based jewellery business, Fowler Oldfield.
NatWest initially understood it would not handle cash from the business but over the course of the customer relationship approximately £365 million was deposited with the bank, of which around £264 million was in cash.
Red flags ignored
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 to these ‘red flags’ was ever taken.
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.
“NatWest is responsible for a catalogue of failures in the way it monitored and scrutinised transactions that were self-evidently suspicious,” according to executive director of enforcement and market oversight at the FCA, Mark Steward.
“Combined with serious systems failures, like the treatment of cash deposits as cheques, these failures created an open door for money laundering,” he concluded.
Categories: Trade Based Financial crimes News