From bullion to bin bags: How dirty money cost NatWest £265 million

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From bullion to bin bags: How dirty money cost NatWest £265 million

Published 16 diciembre 2021

NatWest has been fined almost £265 million after pleading guilty to three charges of failing to comply with anti-money laundering regulations between 2012 and 2016.

The fine could have been greater than £300 million, however deductions were made for NatWest’s guilty plea, cooperation with investigations and the bank’s commitment to invest resources to improve its anti-money laundering practices.

Background

During the period in question, Fowler Oldfield, a gold dealership in Bradford, deposited a total of £365 million with the bank. Of that amount, £264 million had been accepted by NatWest as cash deposits. Clare Montgomery QC, prosecuting on behalf of the FCA, stated that around 50 NatWest branches were used for large sum cash deposits and that on a single day £700,000 in cash was deposited in black bin liners at a Walsall branch.

Although Fowler Oldfield was a high risk customer, during the relevant period NatWest failed to correctly apply risk ratings, subjecting them to less stringent checks. A failure in NatWest’s automated transaction monitoring system also meant that cash deposits were incorrectly registered as cheque deposits, categorising them as lower risk and therefore attracting less scrutiny.

Despite bank employees dealing with these cash deposits reporting suspicions, staff responsible for investigating suspected money laundering failed to effectively scrutinise and take appropriate action. Multiple red flags were reported, including an uncharacteristic amount of Scottish notes and notes with a ‘musty smell’ suggesting they had been stored for a considerable amount of time.

Mrs Justice Cockerill, the sentencing judge, commented that the client relationship manager failed to identify and respond to money laundering flags and failed to effectively scrutinise the account, and criticised NatWest’s over reliance on the client relationship manager.

Comment

This fine (coincidentally similar to the amount laundered by Fowler Oldfield in cash) dwarfs the £163 million fine imposed on Deutsche Bank and the £102 million fine imposed on Standard Charter Bank for similar offences in 2019. In a nod to the FCA’s penalty setting objectives, Mrs Justice Cockerill highlighted that the fine reflected the need for judicial punishment and would serve a deterrent not only to NatWest but to other institutions.  

Although no directors or officers were prosecuted as part of these proceedings, Mrs Justice Cockerill’s comments reinforce that individuals who fail to investigate suspected money laundering are likely to face criticism.

Authors

Sarah Crowther

Sarah Crowther

London - Walbrook

+44 (0)20 7894 6254

Beejal Valera

Beejal Valera

London - Walbrook

+44 20 7894 6887

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