NatWest faces £340m fine after pleading guilty to money laundering failures

8th October 2021
Detail of exterior of courthouse

National Westminster Bank Plc (NatWest) has entered guilty pleas at Westminster Magistrates’ Court to criminal charges brought by the Financial Conduct Authority (FCA) under the Money Laundering Regulations 2007 (MLR 2007).

The court heard around £356m, £264m in cash, from one Bradford-based business customer was deposited in its NatWest account over a five-year period. The bank had earlier forecast the turnover of the firm would amount to £15m a year.

The bank has admitted to three charges brought by the Financial Conduct Authority (FCA) for failing to properly monitor a customer between 2012 and 2016. The regulator has said that it will not pursue existing or past employees from the bank.

NatWest accepts that it failed to comply with regulation 8(1) between 7th November 2013 until 23rd June 2016 and regulations 8(3) and 14(1) between 8 November 2012 until 23 June 2016 under MLR 2007 in relation to the accounts of a UK incorporated customer. These regulations require certain firms, including those regulated by the FCA, to ensure they have adequate anti-money laundering systems and controls to prevent money laundering.

The case has now been referred to the Southwark Crown Court for sentencing.

This is the first criminal prosecution under the MLR 2007 by the FCA.

No individuals are being charged as part of these proceedings.

NatWest said it had cooperated fully with the FCA since its investigation began, adding it has spent almost £700m on beefing up its monitoring systems over the last five years and plans to spend over £1bn in the coming five years.

NatWest Chief Executive Alison Rose said “We deeply regret that NatWest failed to adequately monitor and therefore prevent money laundering by one of our customers between 2012 and 2016.”

“NatWest has a vital part to play in detecting and preventing financial crime and we take extremely seriously our responsibility to prevent money laundering by third parties.

“In the years since this case, we have invested significant resources and continue to enhance our efforts to effectively combat financial crime.”

Commenting on the case, SmartSearch Chief Executive John Dobson said “To have a bank the size of NatWest pleading guilty to money laundering charges is unprecedented, and hopefully will be a wake-up call for the industry.”

“Despite tools being readily available to prevent this illegal activity, currently 99% of ill-gotten gains are successfully laundered by criminals, and regulated businesses need to do much more to prevent this.”

“If the moral obligation to stop terrorists, drug smugglers and sex traffickers legitimising their money isn’t enough motivation, through this case the FCA has shown it is willing to severely punish those who don’t take their responsibilities seriously.”

“To genuinely prevent money laundering, regulated businesses need to be much more proactive in doing away with outdated systems and methods of ID verification, and invest in technology that is fit for purpose. The tech has long been available to quickly and efficiently verify customers and prevent this type of activity, banks just need to adopt it.”

“Without disrupting the customers’ experience, this software will flag the cases that need further attention and save the banks time and effort. Banks can get set-up quickly and easily, so there is no excuse for them not to shore-up their anti-money laundering defences.”