UK: NatWest fined £264m in landmark criminal money laundering case.

As published on internationalinvestment.net, Tuesday 14 December, 2021.

NatWest Group was fined £264.7m at Southwark Crown Court in London yesterday (13 December) after pleading guilty to failing to prevent money laundering in the first criminal case of its kind against a British bank.

In a case involving hundreds of thousands of pounds being couriered in black garbage bags and branch vaults overflowing with banknotes, the bank admitted to three criminal charges in October, accepting that it failed to prevent money laundering at an English gold dealer.

NatWest took in about £365m in deposits, more than two-thirds of which was in cash, across about 50 branches. The deposits piled up despite the gold dealer forecasting an annual revenue of just £15m.

The case was prosecuted by the UK's Financial Conduct Authority, which laid out a series of lapses at local branches as well as repeated failures of overall reporting and oversight.

At Southwark Crown Court, Judge Sara Cockerill said: "Without the bank - and without the bank's failures - the money could not be effectively laundered."

She imposed a fine that was 15% higher than the £340m initially sought by the FCA - partly as a deterrent - although she reduced the total by a third because of the bank's guilty plea.

NatWest's CEO Alison Rose and chairman Howard Davies sent a letter to the judge apologising for the bank's actions.

The gold dealer was shut down after a police investigation in 2016 into what was alleged to be "an extremely sophisticated" money laundering operation.

The bank had agreed it would not handle any cash deposits when it opened the account. But at the height of the activity, the dealer was depositing up to £1.8m per day with its local branch, Clare Montgomery, a lawyer for the FCA, said.

Mark Steward, executive director of enforcement and market oversight at the FCA, said: "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.

"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."

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