It is the first time that regulator has pursued criminal charges for money laundering failings.
In its sentencing at the Southwark Crown Court today, Mrs Justice Cockerill said that although Natwest was not complicit with money laundering it was “functionally vital” to the offences.
She said: “Without the bank – and without the bank’s failures – the money could not be effectively laundered.”
The firm pleaded guilty to three offences in October. The offences related to deposits of £365m made into the bank accounts of one of its commercial customer Fowler Oldfield, a Bradford-based jewellery business.
Between 2012 and 2016, the company deposited around £365m in the bank, of which around £264m was in cash. When taking on the customer the bank understood that it would not handle cash from the company.
Some of the bank’s employees reported their concerns over the cash transactions to staff members responsible for investigating money laundering, but “no appropriate action was ever taken” according to the FCA.
The “red flags” included: depositing significant amounts of Scottish bank notes throughout the UK, notes with a musty smell and individuals acting suspiciously when depositing cash.
The bank’s automated transaction monitoring system also recognised some cash deposits as cheque deposits, which carry a lower money laundering risk than cash.
Mark Steward, executive director of enforcement and market oversight at the FCA, 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.”
NatWest CEO, Alison Rose, said: “NatWest takes its responsibility to prevent and detect financial crime extremely seriously. We deeply regret that we failed to adequately monitor one of our customers between 2012 and 2016 for the purpose of preventing money laundering. While today’s hearing brings an end to this case, we will continue to invest significant resources in the ongoing fight against financial crime.”
