Firms handling large sums of cash have been reminded of their duty to combat money-laundering after NatWest Bank was fined £264.8 million in the Financial Conduct Authority's first criminal prosecution for money laundering failings.
Southwark Crown Court heard that NatWest failed to properly monitor the activity of a commercial customer, took no appropriate action when some suspicions were raised, and had mistakes in its automated transaction monitoring system.
Between November 2021 and June 2016 its commercial customer, a jewellery business named Fowler Oldfield in Bradford, deposited around £365 million with NatWest, of which around £264 million was in cash.
A separate investigation by West Yorkshire Police has led to 11 people pleading guilty to charges relating to the cash deposits, and a further 13 people are awaiting trial at Leeds Crown Court in April 2022 in relation to the activities of Fowloer Oldfield.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “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.”
At the height of the activity on the account Fowler Oldfield was depositing up to £1.8 million in cash per day with NatWest.
When a police investigation uncovered a suspected large-scale money laundering operation run out of Fowler Oldfield and notified NatWest in June 2016, NatWest exited the customer and notified the FCA it had discovered "concerns" in the management of this customer relationship.
The FCA found "a number of weaknesses in the monitoring" by NatWest, with the effect that it failed to comply with regulations.
Although cash centre staff, branch staff and its assistant relationship manager for the account raised 11 internal money laundering suspicion alerts, and its automated system alerted 10 times, NatWest's investigations of these were inadequate.
It had failed to follow its own policies, such as keeping customer due diligence up to date.
Steward added: “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."
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