This week, HSBC and NatWest have been fined for failings in their anti-money laundering procedures. Kate Goold and Grace Benton of our Fraud and White Collar Crime team comment:
In March 2021, the Financial Conduct Authority (FCA) initiated a prosecution against NatWest Bank for money laundering offences. The case was brought under regulation 45 of the Money Laundering 2007 Regulations which makes the failure to maintain adequate and effective anti-money laundering systems a criminal offence. This was the first criminal prosecution of a bank under the Regulations and marked a change in approach for the FCA who previously tended to prefer regulatory action.
This change in approach has been successful for the FCA as NatWest were convicted, and on Monday fined £264.8 million. The conviction relates to NatWest’s failures to monitor a single high-risk customer – Bradford-based gold dealers, Fowler Oldfield. However, the fine was set at this very high level in part because of the large amount of cash deposited at NatWest over a sustained period of time and the likely serious nature of the underlying criminal activity being committed by Fowler Oldfield.
The prosecution will have been designed to act as a powerful reminder and deterrent to financial institutions, as will the £63.9m fine given to HSBC in the same week for their own ineffective transaction monitoring systems.