NatWest has been fined £265m after it failed to prevent money laundering of £365m by one firm.
Vast sums of cash were deposited with the bank in “black bin bags, which tore because of their weight”, according to sentencing remarks in the case brought by the Financial Conduct Authority.
The bank pleaded guilty at Westminster Magistrates’ Court on 7 October. This marks the first time the FCA has pursued criminal charges for money laundering failings.
NatWest was fined £264.8m following convictions for three offences of failing to comply with money laundering regulations.
The sentencing judge at Southwark Crown Court yesterday (13 December) Mrs Justice Cockeril, said NatWest had cooperated and while it was “in no way complicit” in the money laundering, the bank was “functionally vital”.
She said: “Without the bank – and without the bank’s failures – the money could not be effectively laundered.”
The charges against NatWest covered its 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.
The sentencing remarks document, states: “From late 2013, numerous branches started to receive millions in Fowler Oldfield cash. Staff in a number of branches and cash centres flagged concerns about the activity or submitted IMLSRs [laundering suspicion alerts]; however, staff in some other branches/centres did not do so.
“The non-notifiers included branches/centres which received sums between £12m and £43m and situations which included the deposit of such large sums of cash that they were brought in in black bin bags, which tore because of their weight, and sums so large that the bank’s safes were inadequate to store them.”
An update from the FCA said “no appropriate action” was taken after bank employees reported their suspicions higher up the chain.
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.
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.
FCA executive director of enforcement and market oversight Mark Steward 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.”
The fine reflected a discount for the guilty plea. Without it, the bank could have been handed a £397.1m fine.
