NatWest facing criminal charges in landmark U.K. money laundering case

The case is the first criminal prosecution brought by the FCA under the 2007 Money Laundering Regulations (MLR) and the first under the law against a bank.

The details: The FCA alleges National Westminster Bank (NatWest) violated multiple regulations of the MLR requiring firms to “determine, conduct, and demonstrate risk sensitive due diligence and ongoing monitoring of its relationships with its customers for the purposes of preventing money laundering.”

The FCA alleges increasingly large cash deposits were made into accounts operated by a U.K. incorporated customer of NatWest. Of the roughly £365 million (U.S. $507.8 million) that was deposited in total, around £264 million (U.S. $367.3 million) was cash. The FCA said NatWest’s systems and controls “failed to adequately monitor and scrutinize this activity.”

Citing a court summary, Bloomberg was the first to identify the customer as Fowler Oldfield, a jewelry wholesaler that was shut down in 2016 after a series of police investigations.

NatWest is scheduled to appear at Westminster Magistrates’ Court on April 14. No individuals are being charged as part of the proceedings.

Compliance message: “There has been speculation for a long time about whether the FCA would ever actually prosecute a corporate or individual for MLR breaches, as opposed to just imposing regulatory fines and insisting on remediation upgrades to AML compliance and systems and controls,” says Sarah Wallace, a financial services expert at Constantine Law. “It will be uncomfortable reading for other corporates or banks under FCA investigation, particularly as in this case the allegations are historical and date back five to 10 years.”

David Savage, head of financial crime investigations at law firm Stewarts, says, “By taking this step, despite years of cooperation by the bank, the FCA is demonstrating that, absent totally effective anti-money laundering systems and controls, they are willing to prosecute.”