Blog Business Crime & Financial Services 17th Mar 2021

‘We are what we do’: NatWest in the dock

NatWest’s board must be hoping that the Bank’s advertising slogan doesn’t prove to be memorable for all the wrong reasons. Yesterday, the Financial Conduct Authority (‘FCA’) announced that it had commenced criminal proceedings against NatWest in respect of offences under the Money Laundering Regulations 2007 (‘MLR 2007’).

Details are scarce, but the allegations arise from the handling of funds deposited into NatWest accounts by a UK incorporated customer of the Bank (reported by news organisations to be a Bradford gold trading business called Fowler Oldfield which featured in a money laundering prosecution sentenced in 2019) over a five-year period beginning back in 2011. It is alleged that around £365 million was deposited into the accounts, of which (perhaps somewhat surprisingly) £264 million or so was cash and in increasingly large amounts.

The FCA has brought charges under regulations 8(1), 8(3) and 14(1) of the MLR 2007, alleging that NatWest’s systems and controls failed to adequately monitor and scrutinise the account deposit history for the purpose of preventing money laundering. No individuals are to be charged.

The announcement is significant as being the first criminal prosecution brought by the FCA under the MLR 2007 and the first example of a criminal prosecution under the MLR 2007 against a bank. Whether the choice of criminal proceedings, as opposed to the more usual regulatory sanction, is reflective of a new and more aggressive direction for FCA enforcement remains to be seen. But the very fact that the Authority has the confidence and resolve to charge a major UK retail bank sends out a powerful message to the sector.

What is clear is that the reputational damage to a brand that has struggled to shake off the tarnish of the RBS years has already been felt and will inevitably get worse. NatWest’s shares were down by as much as 3% yesterday. The prospect of an unlimited fine will hardly delight shareholders, particularly HM Government which still holds a 62% stake in the Bank following the 2008 crisis.

NatWest is scheduled to appear at Westminster Magistrates’ Court on 14 April. Maybe it’s time to refresh that slogan?


Angus Bunyan


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