NatWest has pleaded guilty to three counts of money laundering failures.

The lender admitted to charges that it failed to ensure adequate anti-money laundering controls were in place on one customer between 7 November 2013 until 23 June 2016 at Westminster Magistrates’ Court.

It now awaits sentencing at Southwark Crown Court for sentencing due in four to eight weeks for a fine that may amount to as much as £400m.

The bank said a provision will be made in the group’s third-quarter financial accounts “in anticipation of a potential fine being imposed at that hearing”. 

The case was brought by the Financial Conduct Authority who say “no individuals are being charged as part of these proceedings.”

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.

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 says: “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.”

SmartSearch chief executive John Dobson says a high street bank pleading guilty to money laundering failures may prove a “wake up call” to other regulated firms who do not devote enough resources to this issue.

Dobson says: “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.”