Failure to spot offences at multiple levels of the organisation necessitates “culture of compliance from the top down” and review of training & procedures.
On Monday 13 December, NatWest plead guilty to three offences of failing to comply with Money Laundering Regulations (2007) and was fined 264.8 million pounds. The compliance failures surround the monitoring and handling of jewellery business Fowler Oldfield, which deposited approximately 365 million pounds with the bank over four years (of which roughly 264 million was in cash). Bank staff were found not to have taken appropriate action over ‘red flags’ including suspicious behaviour when depositing money in-branch and high numbers of Scottish bank notes being deposited in branches throughout England, and there were also failures in internal monitoring processes.
Mark Steward, Executive Director of Enforcement and Market Oversight at the Financial Conduct Authority (FCA), explained why this was the first case of the FCA seeking criminal charges for money laundering offences:
“NatWest is responsible for a catalogue of failures in the way it monitored and scrutinised transactions that were self-evidently suspicious. Combined with serious systems failures, like the treatment of cash deposits as cheques, these failures created an open door for money laundering. Anti-money laundering controls are a vital part of the fight against serious crime, like drug trafficking, and such failures are intolerable ones that let down the whole community”.
You can find the full sentencing remarks here.
Complyport’s Response to NatWest Money Laundering Fine
Martin Schofield, Director of the Financial Crime & Forensics Unit at Complyport, said:
“Whilst cash remains legal tender, every regulated firm is required to identify knowledge, suspicion, or reasonable grounds to suspect money laundering. For banks, the responsibility lies both with frontline staff at branch-level and with senior managers who in this case were supposed to be overseeing all 50 branches caught up in these wrongdoings. Given the large number of staff involved, it is hard to imagine how, if required to do so, they could all demonstrate that they have satisfactorily met this threshold.
“We cannot predict when and how criminals will take advantage of our systems, but regulated firms have plenty of tools at their disposal to help identify financial crime before it reaches such extreme levels. The systemic failures that must have occurred in this case should be a warning to firms to review and, if necessary, tighten up their procedures; invest in proper training and support for compliance staff; and embed a culture of compliance from the top down so that such widespread failures are not repeated.”
Anti-Financial Crime Support – How can Complyport Help?
Our experienced Financial Crime and Forensics team led by Martin Schofield—one of the world’s leading specialists in the field—brings a wealth of experience to every project we are engaged in. Our highly experienced financial crime professionals and forensic experts, in subjects such as anti-money laundering, counter terrorist financing, anti-bribery and corruption and fraud and regularly help our clients navigate the complexities of the financial crime and money laundering environment. Services offered by Complyport include:
- Financial crime health checks and audits,
- Implementation of financial crime, AML, CTF, ABC, Fraud and market abuse controls and frameworks,
- Ongoing advice on financial crime, AML, CTF, market abuse and fraud prevention,
- Authoring/reviewing financial crime policies,
- Outsourced MLRO support
- Outsourced KYC and CDD support,
- Assistance in identifying Politically Exposed Persons (PEPs),
- Assistance in navigating international sanctions,
- Support with preventing market abuse and insider dealing,
- Expert Witness in Financial Crime cases
- Forensics and Investigations
- Design and/or delivery of online or face to face financial crime training
If this article has raised any questions, or you think your firm may require assistance, please contact either Martin Schofield via martin.schofield@complyport.co.uk or Jan Hagen via jan.hagen@complyport.co.uk to book in a free consultation.
About Complyport
Complyport is the City’s market leading consulting firm supporting the UK financial services industry for over 20 years. We specialise in providing Governance, Risk and Compliance services to support the regulated financial services industry to raise standards and thrive.
Complyport advises and assists firms to become authorised and to comply with the rules and requirements of regulators on an ongoing basis. Our vision is to be there for our clients every step of the way, helping them change, grow, and excel through expertise, insight, and innovation, and in so doing to become our clients’ most valued supplier and trusted advisor.
We have successfully assisted over 1000 firms to become authorised with the FCA and EU and are providing regulatory support to over 600 regulated firms on an ongoing basis globally. With presence in the UK and EU, as well as via our Associates Network, Complyport can assist firms across multiple jurisdictions.
Complyport’s multidisciplinary consultants possess deep expertise in their field, having acted in FCA skilled person reviews, as expert witnesses in legal cases and as expert investigators for firms or their legal advisers.
Day to day, we conduct audits and reviews of a firm’s products, processes, policies, and procedures to identify scope for business, to determine the impact of regulatory developments and to verify compliance with local regulations. Our clients tell us we live our values; we are driven, agile and collaborative.
