NatWest fined £265m for literally money laundering in bin bags
NatWest contributed to anti-money-laundering failures that involved black bin liners stuffed full of cash being deposited, and sums so large that one branch’s two floor-to-ceiling safes proved “inadequate” for storing it all. The Bradford Jeweller Fowler Oldfield’s predicted annual turnover was £15m when first taken on as a client, but it ended up depositing £365m with the bank over a five-year-period including £264m in cash.
NatWest Bank in London has been fined $350.9m for failing to prevent the laundering of nearly £400m. In the first criminal money laundering against British bank following convictions for three offences of failing to comply with money laundering regulations.
Mrs Justice Cockerill, the sentencing judge at Southwark Crown Court today said: “ 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- th money could not be effectively laundered”.
NatWest pleaded guilty at Westminster Magistrates Court on 7th October. This is the first time the FCA has pursued criminal charges for money laundering failings.
The charges covered NatWest’s failure to properly monitor the activity of a commercial customer, Fowler Oldfield, a Jewellery business based in Bradford, between 8 November 2012 and 23 June 2016. When taking on the customer, NatWest Initially understood it would not handle cash from the Fowler Oldfield business. However, over the course of the customer relationship approximately £365m was deposited with the bank, of which around £264m 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. The “red flags” were reported included significant amount of Scottish Bank notes deposited throughout England, deposited of notes carrying a prominent musty smell, and individuals acting suspiciously when depositing cash in NatWest branches. In addition, the banks automated transaction monitoring system incorrectly recognised some cash deposits as 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 Flower Oldfield was one.
A separate investigation by West Yorkshire Police has led to 11 people 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.
“ 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, these failures created an open door 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” Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA said.
NatWest failed to comply with Money Laundering Regulations (2007). Which came into force on 15 December 2007 and form part of the UK’s legislative framework designed to prevent the use of the financial system for the purpose of money laundering and terrorist financing. They were superseded by the Money Laundering, Terrorist Financing and Transfer of Funds ( Information on the Payer) regulations 2017. National Westminster Bank Plc is a subsidiary of NatWest Group Plc ( formerly the Royal Bank of Scotland Group Plc).