FCA launches criminal proceedings against NatWest for alleged moneylaundering failures

Bank failed to act on suspicious transaction despite £264m allegedly paid into customer account in cash

16 March 2021

The City regulator today launched criminal proceedings against majority state-owned NatWest bank over alleged failures under the moneylaundering rules.

The Financial Conduct Authority says NatWest allowed increasingly large cash deposits to be lodged in a customer’s account that should have alerted suspicions.

It is alleged that around £365 million was paid into the customer’s accounts, of which £264 million was in cash.

The FCA claims NatWest “failed to adequately monitor and scrutinise this activity”.

NatWest, until recently known as Royal Bank of Scotland, is 62%-owned by the taxpayer after its bailout in the financial crisis.

It is scheduled to appear at Westminister Magistrates Court on 14 April.

It is the first time the FCA has ever launched a criminal prosecution under the 2007 Money Laundering Regulations and the first time the rules have been used to prosecute a bank.

The prosecution is being brought under regulation 45 of the rules which require firms such as NatWest to to maintain adequate and effective anti-money laundering systems and controls.

“The purpose of MLR 2007 is to ensure firms take all reasonable steps to prevent their use for money laundering purposes,” the FCA said.

NatWest said it was notified in July 2017 of the investigation and has been cooperating with it “to date.”

“NatWest Group takes extremely seriously its responsibility to seek to prevent money laundering by third parties and accordingly has made significant multi-year investments in its financial crime systems and controls.”

It said the alleged failures took place between 11 November 2011 and 19 October 2016 “arising from the handling of the accounts of a UK incorporated customer.”

The City of London has been battling for years with its reputation as a hub for global moneylaundering with anti-corruption campaigners highlighting the billions of pounds flowing through the UK financial system from ill-gotten gains made by criminals or corrupt officials from overseas.

While successive governments have clamped down on lax practices, prosecutions for moneylaundering remain extremely rare.

The FCA prosecution will be damaging to the reputation of the bank’s chief executive Alison Rose who has set a firm moral compass at the group after huge criticisms over the way it mistreated SME customers in financial difficulties after the global financial crisis.

It is unclear in which division of the bank the accounts were held, but Rose was in charge of commercial and private banking before becoming chief executive in 2019.