Release Date: 13th December 2021
To access the original FCA document, click here.
Summary
National Westminster Bank Plc (NatWest) has been fined £264,772,619.95 for failing to comply with money laundering regulations. This is the first time the Financial Conduct Authority (FCA) has pursued criminal charges for such failings. NatWest admitted guilt to three offences, highlighting significant lapses in monitoring the activities of a commercial customer, Fowler Oldfield, between 8 November 2012 and 23 June 2016. Despite initial understanding that no cash would be handled, approximately £365 million was deposited, of which around £264 million was in cash.
Key failings included:
- Inadequate monitoring and scrutiny of transactions.
- Ignoring “red flags” reported by employees, such as suspicious behaviour during deposits and the musty smell of notes.
- Incorrectly categorising cash deposits as cheque deposits due to a malfunctioning automated transaction monitoring system.
The failures of NatWest’s systems and the lack of appropriate action on suspicious activities were critical in facilitating the laundering of large sums of money. The sentencing judge, Mrs Justice Cockerill, emphasised that while NatWest was not complicit in the laundering activities, their failures were crucial for its execution.
Key Takeaways for Other Firms:
- Effective Monitoring: Implement robust systems to monitor and scrutinise all transactions, particularly high-risk activities such as large cash deposits.
- Respond to Red Flags: Ensure employees are trained to identify and escalate suspicious activities, and that appropriate actions are taken promptly.
- Maintain System Integrity: Regularly audit and update transaction monitoring systems to ensure they correctly identify and categorise deposits.
- Regulatory Compliance: Adhere strictly to anti-money laundering regulations and continuously review and enhance compliance programs.
- Cooperate with Authorities: Work closely with regulatory and law enforcement bodies to uphold the integrity of financial systems.
In conclusion, the FCA’s action against NatWest underscores the importance of stringent anti-money laundering controls. Firms must ensure rigorous compliance to prevent financial systems from being exploited for criminal activities.
