Yahoo Finance FCA starts criminal proceedings against NatWest for alleged money laundering
The UK's Financial Conduct Authority (FCA) said on Tuesday it has started criminal proceedings against NatWest (NWG.L) bank, which it alleges has breached the UK's Money Laundering Regulations 2007 (MLR 2007).
The FCA said that the case has arisen from the handling of funds deposited into accounts operated by a UK incorporated customer of NatWest.
NatWest is a subsidiary of the NatWest group, which is state-backed and 62% owned by the taxpayer. It was previously known as the Royal Bank of Scotland.
The City watchdog said that this is the first criminal prosecution under the MLR 2007 by the FCA and the first prosecution under the MLR against a bank.
The FCA alleges that increasingly large cash deposits were made into the customer’s accounts. It is alleged that around £365m ($505m) was paid into the customer’s accounts, of which around £264m was in cash.
The allegations date back to between 2011 and 2016.
Watch: U.K. Lender NatWest Hit With Money-Laundering Charge
READ MORE: FanDuel owner Flutter considers spin-out IPO
It is alleged that NatWest's systems and controls failed to adequately monitor and scrutinise this activity.
NatWest said in a statement: "Since being notified of this investigation in July 2017, NatWest Group has disclosed that the FCA was undertaking an investigation into NatWest Group's compliance with the MLR 2007. NatWest Group has been co-operating with the FCA's investigation to date.
"NatWest Group takes extremely seriously its responsibility to seek to prevent money laundering by third parties and accordingly has made significant, multi-year investments in its financial crime systems and controls."
NatWest is scheduled to appear at Westminster Magistrates’ Court on 14 April.
No individuals are being charged as part of these proceedings.
Jonathan Fisher QC, barrister at Bright Line Law, said: “In terms of enforcement, initiating a criminal prosecution against a leading bank is like pressing the nuclear button. It is one thing for a bank to be fined for anti-money laundering failures, it is another thing for a bank to be criminally charged.
"In terms of reputation it is potentially very damaging and given that anti-money laundering procedures have been around for a long time, if NatWest has fallen short, it leaves the bank with a lot of explaining to do."
Fisher noted that if convicted, NatWest faces an unlimited fine and other regulatory consequences may follow.
"A conviction for breach of money laundering regulations is something which may be taken into account when deciding whether to renew authorisations, and the awarding of public contracts," he said.
NatWest stock fell sharply at the opening bell in London to trade 1.8% lower. Meanwhile, the FTSE 100 (^FTSE) was trading 0.5% higher.
Watch: What is inflation and why is it important?
