NatWest Violated Money Laundering Rules, FCA Says

The United Kingdom’s Financial Conduct Authority (FCA) announced Tuesday (March 16) it had commenced criminal proceedings against National Westminster Bank Plc (NatWest) for violation of money laundering regulations.

According to the FCA,  those regulations require banks to “determine, conduct and demonstrate risk sensitive due diligence and ongoing monitoring of its relationships with its customers” to prevent money laundering.

It is the first FCA prosecution under the money laundering regulations adopted in 2007 and the first prosecution against a bank under the same regulations.

“The case arises from the handling of funds deposited into accounts operated by a UK incorporated customer of NatWest,” the authority said in a news release.

“The FCA alleges that increasingly large cash deposits were made into the customer’s accounts. It is alleged that around £365 million was paid into the customer’s accounts, of which around £264 million was in cash.”

The deposits in question happened between November 2011 and October 2016. The FCA says NatWest’s systems and controls failed to properly oversee this activity. The bank is due in Westminster Magistrates’ Court on April 14. No individuals have been charged.

The FCA moved last year to strengthen protections for users of card payments and digital apps. The authority said at the time their guidance “makes very clear our expectations in light of coronavirus of what payments firms must do to protect customers’ money robustly.”

That move followed the collapse of Wirecard AG, which locked millions of customers out of their accounts in the summer of 2020.

The regulations the FCA created at the time required payment providers and electronic money issuers to maintain records of all funds they receive and operate a “safeguarding account” for customer money.

The FCA also required companies to take more care in choosing third-party service providers and to review those providers from time to time.