In March 2021, The Financial Conduct Authority (FCA) announced that it was launching criminal proceedings against NatWest, one of the largest banking groups in the UK, for allegedly failing to prevent money laundering in line with Money Laundering Regulations 2007.
The FCA alleges that the bank failed to adhere to the requirements of the regulations between 11 November 2011 and 19 October 2016, requiring organisations to monitor its customers on a risk-sensitive basis for the purposes of preventing money laundering. The case against NatWest is in relation to the handling of funds from a corporate customer account that was collecting large cash deposits in that time frame. The FCA has alleged that around £365 million was paid into the customers’ accounts, of which approximately £265 million was cash – believing that NatWest failed to adequately monitor and scrutinise this activity.
NatWest was due to appear in Court on May 26th 2021 in the first criminal prosecution under the MLR 2007 by the FCA and the first prosecution under the MLR against a bank.
In response to the proceedings, John Dobson, CEO at anti-money laundering experts, SmartSearch, said: “To have a bank the size of NatWest facing criminal proceedings in a British court is unprecedented and suggests a much more aggressive approach by the FCA in dealing with those who fail to properly prevent fraud.
“At the moment 99 per cent of all ill-gotten gains are successfully laundered by criminals, and banks need to do much more to prevent this. Whether through naivety or lack of attention to detail, there have been too many gaps in security allowing activity to go undetected.
“Change has to come from the top down and I’m sure whatever happens as a result of this case will instigate significant change within NatWest’s processes. Banks need to be much more proactive in doing away with outdated systems and methods of ID verification, and invest in technology that is fit for purpose.
“The tech has long been available to quickly and efficiently verify customers and prevent this type of activity, banks just need to adopt it. Without disrupting the customers’ experience, this software will flag the cases that need further attention and save the banks time and effort.
“Banks can get set-up quickly and easily, so there is no excuse for them not to shore-up their anti-money laundering defences.”