NatWest fined $351M for failing to prevent money laundering

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NatWest has been fined $350.9 million for failing to prevent the laundering of nearly $528 million, capping the first criminal money laundering case against a British bank.

The fine would have been north of $396 million, but a deduction was made for the bank’s guilty plea, the judge said.

A criminal gang deposited hundreds of million in cash at around 50 branches of NatWest, prosecutors for Britain’s financial regulator said on Monday, with at least one individual outlet receiving more than $52 million.

Couriers walked through the streets of British towns carrying bags of cash they then deposited at the bank’s branches before the scheme was busted by police, the Financial Conduct Authority (FCA) told the judge.

One person in Walsall arrived at a branch with so much cash in bin liners — $925,000 — that they broke and the money had to be repacked in hessian bags, the FCA’s lawyer Clare Montgomery said, adding the cash also did not fit in the branch’s floor-to-ceiling safes.

Exterior of a NatWest bank
In one case, an individual hauled in so much cash that the bag broke open.
REUTERS

The state-backed bank had previously pleaded guilty in October to three criminal charges of not adequately monitoring customer accounts between 2012 and 2016. 

NatWest is Britain’s biggest business bank and is still majority taxpayer-owned after a 59 billion pound-plus state bailout during the financial crisis.

The FCA said NatWest failed to monitor suspect activity by a client – Fowler Oldfield, a Bradford-based gold dealer and jeweler liquidated after a police raid in 2016 – that deposited about $482 million pounds, including $349 million in cash.

At its height, as much as $2.38 million was being deposited in cash daily, and the customer became NatWest’s most lucrative in the area, Montgomery said.

A NatWest sign at brick office building
Some of the Scottish notes involved in the money-laundering activity had a telltale musty smell.
REUTERS

NatWest failed to properly investigate numerous warnings generated by its financial crime systems, miscategorized the customer as lower risk than it was, and staff investigating the warnings lacked sufficient experience and knowledge, the FCA lawyer said.

One rule designed to flag suspicious activity was disabled by NatWest because it created too many alerts, “so the bank decided it should be deactivated”, Montgomery said.

The National Crime Agency (NCA) at one stage raised concerns at the sheer quantity of Scottish bank notes being deposited many miles away in England, which it said was an indicator of potential crime, the FCA said.

One of the bank’s cash centers in Washington, north-east England, voiced concern about the high volume of Scottish notes being deposited and said they had a “musty smell,” which the judge said could be indicative of storage rather than regular business use.

The NCA did not immediately respond to a request for comment.

A woman walks past a NatWest bank branch
One of the bank’s relationship managers “lost his perspective,” a NatWest lawyer said.
Ian Waldie

The judge said she would also issue a confiscation order for a portion of the money gained by NatWest from Fowler Oldfield.

One person working at a NatWest Basingstoke cash center who was close to retirement warned the activity was the most suspicious he had seen in his career, the FCA said.

“How could they possibly have missed all this? That would be a perfectly reasonable question. To which the answer is, they didn’t miss it,” John Kelsey-Fry, lawyer for NatWest, told the court.

“The protections in the bank actually worked to the extent that the relevant activity was identified, it was highlighted. It did not escape the bank’s systems, it did not go under the radar. The quality and adequacy of that scrutiny is another matter.”

The relationship manager who was responsible for the suspect account was dismissed, but not due to any suggestion of complicity in illegal activity, Kelsey-Fry said.

“He got so close that he lost his sense of perspective and judgement, and was completely taken in.”

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