The Financial Conduct Authority is to prosecute NatWest for money laundering breaches in the regulator’s first prosecution of its kind, causing shockwaves across the financial community.
The bank is accused of breaching the Money Laundering Regulations 2007 from November 2011 until October 2016 in relation to the handling of funds deposited into accounts operated by a UK incorporated NatWest customer.
Increasingly large cash deposits were made into the accounts, the FCA is alleging. Some £365m was paid into the accounts of which around £264m was in cash.
The FCA says NatWest's systems and controls failed to adequately monitor and scrutinise this activity in breach of hits obligations under regulations 8(1), 8(3) and 14(1).
Claire Cross, a partner at Corker Binning, said that in 2018, the FCA’s head of enforcement Mark Steward stated that the regulator had commenced a small number of investigations to ascertain whether there had been any misconduct in the industry that might justify a prosecution.
She commented: “Until today, the general consensus was that a criminal case would be unlikely to be forth coming. This was partly due to the fact that the FCA had shut the majority of its criminal based investigations in this area and partly due to the amount of time that had passed since the original announcement.”
Cross said the news “will cause shockwaves across the financial community” because it involved a well-known high street bank and as it’s the first FCA prosecution under the MLR.
“It also sets an important precedent”, she added. “Noone is too big to escape the FCA’s criminal net”
She said that in pursuing NatWest, Mark Steward “has set an important precedent that he is not afraid to pursue big players in the financial industry”.
“If ultimately there is a finding of guilt in this case, NatWest’s penalty will be a financial one imposed by the courts. It will be interesting to see if those circumstances come to pass and whether any such fine is more or less than the hefty ones previously imposed by the FCA for civil breaches,” said Cross....