Please find the original article here on the Financial Times’ website.
The FT reports that the Financial Conduct Authority (FCA) has began criminal proceedings against NatWest for breaking anti-money laundering rules. The case is a landmark under the law, being the first attempt of prosecution against a UK bank.
Through 2011 to 2016, a UK customer made a series of cash deposits into the account totalling the £365 million. The FCA alleges that NatWest “failed to adequately monitor and scrutinise” these proceedings.
The customer in question operated a money service firm. NatWest’s annual report describes this as a business that “transmits money, cashes cheques or operates a bureau de change”.
The FCA has been carrying out an investigation into potential failures at NatWest since 2017. A statement from NatWest said that it had co-operated with the FCA.
In a further statement, the bank said it:
“…takes extremely seriously its responsibility to seek to prevent money laundering by third parties and has accordingly made significant, multiyear investments in its financial crime systems and controls”.
In cases of criminal money-laundering, a court can impose an unlimited fine.
Jonathon Fisher QC, a specialist in money-laundering, said:
“This is potentially very serious, and not just because there is an unlimited fine. It will send shivers of concern down the spines of those operating in the regulated sector whose anti-money-laundering procedures are not 100 per cent.”
Despite the strongest sanction for NatWest being a fine – the same outcome as a civil penalty, the fact that it is a criminal case comes with additional consequences. Fisher further explained that a criminal conviction could result in the bank being unable to renew its regulatory license, or to bid in public tenders.
The FCA has often stated it would enforce its criminal money-laundering powers. However, until now, there has been no action taken. Therefore, with the FCA flexing its powers for the first time, this is a great case-study for risk management. If you run an FCA-regulated firm, be sure to carry out the requisite due diligence.
Furthermore, in September, the FCA revealed that it had stopped seven of 14 criminal probes into money laundering. Moreover, in 2018 it downgraded its probe into Credit Suisse. The probe concerned $2bn of “tuna bonds” in Mozambique. The FCA reduced this to a regulatory investigation.
Whilst no individual currently faces criminal charges in the NatWest case, the law allows for a maximum two-year sentence to be applied.
Therefore, NatWest will attend court next month.
As well as the 2017 investigation, the FCA opened a separate review by an external expert in 2019. The review is ongoing, and is examining the wider financial crime arrangements at NatWest.