Britain’s NatWest concede that it was unable to stop money laundering through it worth 400 million pounds ($544 million) and is likely to be slapped with a substantial fine.
This is the first lender of the United Kingdom to have conceded to a criminal charge of not preventing money laundering.
The British bank was bailed out by the government via an investment of 45 billion pounds during the 2008 financial crisis and is thus owned 55 per cent by the British tax payer. Three criminal charges were filed against the bank related to it not being able to effectively monitor customer accounts between 2012 and 2016 and the bank had entered guilty pleas in a London court on those charges.
“The facts of the case are complex, the likely sentence is a very large fine,” Clare Montgomery, a lawyer for the Financial Conduct Authority (FCA), which prosecuted the case against NatWest, told Westminster Magistrates’ Court.
Montgomery told the court that a possible fine of about 340 million pounds under sentencing guidelines could be slapped against the bank although the actual level of the fine would be settled by a judge later this year.
The outcome of the case is a clear and unambiguous message for the banking industry of the country to establish anti-money laundering systems and controls within their organizations, said Sara George, a white collar crime lawyer at Sidley.
To account for the possible fine, a provision in its third quarter results next month will be made by it, NatWest, Britain’s biggest business bank, said in a statement.
According to the FCA, NatWest was clearly unable to screen suspicious activity by a client who deposited with a bank a total of 365 million pounds in its accounts over a period of five years, and 264 million of that amount was deposited in cash.
However, it stated that it did not anticipate any other authorities looking into the matter and would not be taking action against any of the bank’s current or former employees.
“We deeply regret that NatWest failed to adequately monitor and therefore prevent money laundering by one of our customers,” NatWest CEO Alison Rose said in a statement.
A total investment of 700 million pounds was made by the bank for better establishing anti-money laundering systems in the last five years, NatWest said.
The court was told that a sentencing hearing in the case will be held at a higher Crown Court, possibly around December 7.
This is the first occasion that a criminal action was filed by the FCA against a bank under a 2007 money laundering law. The FCA had first announced this action in March. According to analysts, this case is also a setback to Rose’s efforts to rebrand the bank from the scandal-tainted Royal Bank of Scotland last year.
It is unusual in the United Kingdom to prosecute a bank for criminal conduct and such actions can risk the ability of a bank in operating following conviction, which is not the case in any civil action.
“Today’s events should have compliance departments reviewing their own procedures to ensure adherence to the regulations,” Neil Williams, deputy head of complex crime at Reeds Solicitor, said. “The message from the FCA is clear: comply or face court.”
(Adapted from TheGuardian.com)