The Financial Conduct Authority (FCA) has today announced that it has commenced criminal proceedings against National Westminster Bank Plc (NatWest) in respect of offences under the Money Laundering Regulations 2007 (MLR 2007).
The FCA alleges that NatWest failed to adhere to the requirements of regulations 8(1), 8(3) and 14(1) of MLR 2007 between 11 November 2011 and 19 October 2016. These regulations require the firm to determine, conduct and demonstrate risk sensitive due diligence and ongoing monitoring of its relationships with its customers for the purposes of preventing money laundering.
The case arises from the handling of funds deposited into accounts operated by a UK incorporated customer of NatWest. The FCA alleges that increasingly large cash deposits were made into the customer’s accounts. It is alleged that around £365 million was paid into the customer’s accounts, of which around £264 million was in cash. It is alleged that NatWest’s systems and controls failed to adequately monitor and scrutinise this activity.
NatWest is scheduled to appear at Westminster Magistrates’ Court on 14 April 2021. This is the first criminal prosecution under the MLR 2007 by the FCA and the first prosecution under the MLR against a bank. No individuals are being charged as part of these proceedings.
Tony Wyatt, Barrister at Ewing Law:
For now, however, all we know is that the Financial Conduct Authority has finally bared its teeth. And for the City of London, that will come as an unwelcome surprise.
Jonathan Fisher QC, Barrister at Bright Line Law:
“In terms of enforcement, initiating a criminal prosecution against a leading bank is like pressing the nuclear button. It is one thing for a bank to be fined for anti-money laundering failures, it is another thing for a bank to be criminally charged. In terms of reputation it is potentially very damaging, and given that anti-money laundering procedures have been around for a long time, if NatWest has fallen short, it leaves the bank with a lot of explaining to do. This is a 62.4% State owned bank, and so we have the irony of the government prosecuting itself! Other financial institutions will be sitting less comfortably today if their anti-money laundering procedures are not totally compliant with the requirements of the regulations”.
“If convicted, the Bank faces an unlimited fine and other regulatory consequences may flow. A conviction for breach of money laundering regulations is something which may be taken into account when deciding whether to renew authorisations, and the awarding of public contracts. There may be other consequences too. A bank criminally convicted of failing to take adequate measures to prevent money laundering is not a great place to be”.