Britain’s NatWest bank was fined £265m for a series of anti-money laundering failures, including taking cash deposits carried in bin bags as part of the operation of a suspected “drugs gang”.
London’s Southwark Crown Court on Monday heard how bags of cash were taken to 50 NatWest branches between 2012 and 2016 and deposited into accounts linked to Bradford-based jeweller called Fowler Oldfield.
The Financial Conduct Authority (FCA) suspected the company of being a front for an illegal drugs operation that was eventually shut down after a police raid.
Some of the deposits were so big that one branch’s two floor-to-ceiling safes proved “inadequate” for storing it all. Fowler Oldfield’s predicted annual turnover was £15m when first taken on as a client by the bank, but it ended up depositing £365m over a five-year period, including £264m in cash.
The court heard that one person in Walsall had even arrived at a branch with £700,000 in cash in bin bags – so much that they broke and the money had to be repacked in hessian bags. Another branch, in Southall, took in £42m between January 2015 to March 2016 – but no report was made that it was suspicious.
NatWest, still 55% owned by the taxpayer after the financial crash of 2008, had pleaded guilty in October to three charges linked to failing to prevent the laundering.
Sentencing the lender, Mrs Justice Cockerill pointed to the “glaring nature of some of the failures” and said the fine needed to be big enough “that it will be felt by management and shareholders of the bank”. However, the penalty was reduced from £397m because of NatWest’s guilty plea.
“Although in no way complicit in the money laundering which took place,” the judge said, “without the bank’s failures, the money could not be effectively laundered.”
Prosecutor Clare Montgomery said there “was a rapid escalation in the amount of cash” being deposited from November 2013, with figures reaching up to £1.8m a day, and by 2014 Fowler Oldfield was the “single-most lucrative” client in the Bradford region.
NatWest’s Halifax branch received £750,000 in three days, while Piccadilly and New Bond Street, which had “several millions” in deposits, were worried it was more cash than they could cope with.
Concerns were raised at a cash centre over the presence of Scottish notes, which the court heard smelled “musty” as if it had been “stored under the floorboards”.
Montgomery said the National Crime Agency requested information about the customer over fears the money could be linked to the drugs trade but NatWest declined and the concerns did not result in any further action. The court also heard that a rule designed to flag suspicious activity was disabled by the bank because it created too many alerts so it was deactivated.
It is the first time a financial institution has faced criminal prosecution by the Financial Conduct Authority (FCA) under anti-money laundering laws in the UK.
