The City watchdog has begun criminal proceedings against the taxpayer-owned lender NatWest for allegedly failing to prevent money laundering, the first prosecution brought under money laundering regulations introduced in 2007.
The Financial Conduct Authority alleges that NatWest, a subsidiary of NatWest Group (formerly known as Royal Bank of Scotland), allowed “increasingly large cash deposits” to be paid into the accounts of a UK-registered customer of the bank, between November 2011 and October 2016. It is alleged that £365m was paid in, including £264m in cash.
NatWest said that the prosecution related to its commercial banking division, and that the client that the FCA referred to was no longer a customer.
The FCA said: “It is alleged that NatWest’s systems and controls failed to adequately monitor and scrutinise this activity.” No individuals are being charged.
NatWest is scheduled to appear at Westminster magistrates court on 14 April. Possible penalties include fines.
It is the first criminal prosecution under the money laundering regulations 2007 by the FCA, and the first prosecution under the regulations against a bank.
The City regulator is bringing proceedings against NatWest under regulation 45, which requires firms to maintain adequate and effective anti-money laundering systems and controls, and to take “all reasonable steps to prevent their use for money laundering purposes”.
NatWest said it had been cooperating with the investigation since the FCA notified it in July 2017. The bank added: “NatWest Group takes extremely seriously its responsibility to seek to prevent money laundering by third parties and accordingly has made significant, multi-year investments in its financial crime systems and controls.”
It is the first time NatWest has been prosecuted for money laundering. The bank said it had more than 4,000 staff – 8% of its headcount – dedicated to detecting and preventing financial crime and had invested more than £1.2bn in improving its systems and controls in the last decade.
The prosecution is a major blow to NatWest’s reputation and the efforts of its chief executive Alison Rose to repair it. The bank nearly collapsed in 2008 and is still 62% taxpayer-owned, after the UK government stepped in with a £45bn bailout.
The FCA said it was conducting separate investigations into other firms under the money laundering regulations. The City of London has long battled with its reputation as a global hub for money laundering.