NatWest fined £264.8 million for anti-money laundering failures

Mrs Justice Cockerill, the sentencing Judge, stated: “It must be borne in mind that, although in no way complicit in the money laundering which took place, the bank was functionally vital. Without the bank – and without the bank’s failures – the money could not be effectively laundered.”

NatWest pleaded guilty to the charges levied at Westminster Magistrates Court back on Thursday 7 October. Specifically, the charges covered NatWest’s failure to properly monitor the activity of a commercial customer, namely Fowler Oldfield (a jewellery business based in Bradford), between 8 November 2012 and 23 June 2016. 

When taking on the customer, NatWest initially understood that it would not handle cash from the Fowler Oldfield business. However, over the course of the customer relationship, approximately £365 million was deposited with the bank, of which around £264 million was in cash.

Some of the bank’s employees, who were responsible for handling these cash deposits, reported their suspicions to bank staff responsible for investigating suspected money laundering. However, no appropriate action was ever taken.

‘Red flags’

The ‘red flags’ that were reported included significant amounts of Scottish bank notes deposited throughout England, deposits of notes carrying a prominent ‘musty’ smell and individuals acting suspiciously when depositing cash in NatWest branches.

In addition, the bank’s automated transaction monitoring system incorrectly recognised some cash deposits as being cheque deposits. As cheques carry a lower money laundering risk than cash, this was a significant gap in the bank’s monitoring of a large number of customers depositing cash, of which Fowler Oldfield was one.

A separate investigation conducted by the West Yorkshire Police has led to eleven individuals pleading guilty to charges relating to the cash deposits and three cash couriers being charged.

A further 13 individuals are awaiting trial at Leeds Crown Court on 25 April 2022 in relation to the activities of Fowler Oldfield.

Criminal charges ‘first’

This case represents the first time that the Financial Conduct Authority (FCA) has pursued criminal charges for suspected money laundering failings.

Mark Steward, executive director of enforcement and market oversight at the FCA, observed: “NatWest is responsible for a catalogue of failures in the way it monitored and scrutinised transactions that were self-evidently suspicious. Combined with serious system failures, like the treatment of cash deposits as cheques, this created an open door for money laundering.”

Steward added: “Anti-money laundering controls are a vital part of the fight against serious crime, like drug trafficking. Such failures are intolerable ones that let down the whole community. This justifies the FCA’s first criminal prosecution under the Money Laundering Regulations (2007).”

*For a detailed legal appraisal of this case involving NatWest access the latest edition of Security Matters (‘Rule of Law’, page 22)