NatWest Faces £340 Million Fine on Money Laundering Guilt
NatWest Group Plc could face a fine of several hundred million pounds from the U.K.’s financial watchdog after pleading guilty to three criminal charges of money laundering.
The bank admitted that it failed to prevent money laundering at an English gold dealer. NatWest took in some 365 million pounds ($500 million) in deposits over five years, more than two-thirds of which was in cash despite the gold dealer indicating an annual revenue of 15 million pounds per year.
The criminal charges, brought by the Financial Conduct Authority, were the first of their kind. Clare Montgomery, a lawyer for the FCA, suggested the fine could potentially be around 340 million pounds, which would be higher than the sum of all the regulator’s other fines for the past two years. The ultimate penalty is still to be determined by a London judge later in the year, who will consider any mitigating factors.
The bank had agreed it wouldn’t handle any cash deposits when it opened the account. At one point, the dealer was depositing up to 1.8 million pounds per day with the local branch, Montgomery said.
“We deeply regret that NatWest failed to adequately monitor and therefore prevent money laundering by one of our customers between 2012 and 2016,” NatWest Chief Executive Officer Alison Rose said in a statement.
NatWest’s shares were down 0.04% as of 12:30 p.m. in London.
The case is the regulator’s first criminal prosecution under 2007 money laundering rules and the first prosecution against a bank, part of a concerted effort by the FCA to act more forcefully.
“This prosecution is an unprecedented step by the FCA and can be seen as part of a wider effort by law enforcement agencies to up the ante in enforcement of the rules designed to prevent money laundering,” said Jessica Parker, a white collar crime lawyer at Corker Binning.
The bank, which was notified of an investigation in 2017 and is still majority-owned by the U.K. government, said it will take a provision in the third-quarter financial accounts in anticipation of a potential fine being imposed. The FCA has confirmed it will not take action against any individual current or former employee of NatWest, the bank said.
“We have often been criticised for acting slowly or with too much risk aversion. This is changing. We are applying a bolder risk appetite in dealing with serious misconduct,” FCA Chief Executive Officer Nikhil Rathi said in a speech last month. “In the future we will be a regulator that tests our powers to their limits, to ensure market integrity.”
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