NatWest pleads guilty in FCA anti money laundering case

eskbanker

Allowing a company with a predicted annual turnover of £15m to deposit £264m in cash (plus another £100m) over five years hardly seems like the level of scrutiny many of NatWest's personal current holders suffer from, but perhaps that's why (anecdotally) they've been clamping down more in recent times....

https://www.fca.org.uk/news/press-releases/natwest-plc-pleads-guilty-criminal-proceedings

https://www.bbc.co.uk/news/business-58826491

Thrugelmir

Far easier to monitor unusual retail customer activity. Than it is to know what a company's annual turnover is compared to the level of cash banked. Safe to assume that those operating the money laundering set-up created a decent smokescreen and no doubt lied when responding to any questions asked. 

eskbanker

Thrugelmir said:

Safe to assume that those operating the money laundering set-up created a decent smokescreen and no doubt lied when responding to any questions asked. 

If that was the case then NatWest would be able to argue plausibly that their due diligence and monitoring regime wasn't at fault but was stymied by a cunning web of deceit, but their guilty plea indicates (to me at least) that they accept it was inadequate.

Ballard

It’s scarcely believable that a bank could not notice such a massive difference between expected and actual activity. The whole point in KYC is to know things like expected turnover so this case should have rung all sorts of bells. 

phillw

eskbanker said:
If that was the case then NatWest would be able to argue plausibly that their due diligence and monitoring regime wasn't at fault but was stymied by a cunning web of deceit, but their guilty plea indicates (to me at least) that they accept it was inadequate.

It's probably cheaper to admit guilt and pay the fine, than pay to defend the case.

They might not themselves know whether an eye was turned deliberately.

Daliah

Ballard said:

It’s scarcely believable that a bank could not notice such a massive difference between expected and actual activity. The whole point in KYC is to know things like expected turnover so this case should have rung all sorts of bells. 

They were probably all maxed out in Natwest with blocking accounts of thousands of ordinary folk who occasionally sent a few quid to a mate, or pocket money to their kids 🤪

Ballard

phillw said:

eskbanker said:
If that was the case then NatWest would be able to argue plausibly that their due diligence and monitoring regime wasn't at fault but was stymied by a cunning web of deceit, but their guilty plea indicates (to me at least) that they accept it was inadequate.

It's probably cheaper to admit guilt and pay the fine, than pay to defend the case.

They might not themselves know whether an eye was turned deliberately.

From the facts disclosed it would be difficult to defend themselves. KYC legislation dictates that they have a duty to know what business their customers conduct and the level of turnover expected. The accounts should not be allowed to operate outside of the expectation without being questioned.

I read the article yesterday so may have this slightly wrong but the expected cash handling was negligible but over a million pounds cash was banked some days.

This is deeper than simply a few greedy employees being star struck by the potential of a large bonus. It’s a systematic failure at the bank. It should be impossible for their systems to allow this without KYC/AML departments being repeatedly alerted. 

As has already been stated, individuals have had their accounts frozen for innocent reasons by these very same rules and if NatWest had messed me about I’d be angrily demanding answers. 

Thrugelmir

eskbanker said:

Thrugelmir said:

Safe to assume that those operating the money laundering set-up created a decent smokescreen and no doubt lied when responding to any questions asked. 

If that was the case then NatWest would be able to argue plausibly that their due diligence and monitoring regime wasn't at fault but was stymied by a cunning web of deceit, but their guilty plea indicates (to me at least) that they accept it was inadequate.

An individual dropped a clanger.  At the end of the day will be somebody failing to perform their duties properly. As in any business you are are reliant on the integity of your employees.  At least one person will lose their job and as a consequence be blackmarked from working in the financial services sector ever again. The internal compliance team can only randomly select so many accounts to audit thoroughly every year. In the end probably was self disclosure by the Nat West to the regulators. . 

Daliah

Ballard said:

From the facts disclosed it would be difficult to defend themselves. KYC legislation dictates that they have a duty to know what business their customers conduct and the level of turnover expected. The accounts should not be allowed to operate outside of the expectation without being questioned.

I wouldn‘t be surprised if the fraudsters had infiltrated Natwest by getting onto their payroll, and/or offered backhanders to employees who were in a position to overwrite system and manual controls. Nor would I be surprised if we all, at Natwest or other UK banks, will be have to suffer increased controls. Happy to be proven wrong, obviously.

Momanns

An individual dropped a clanger.  At the end of the day will be somebody failing to perform their duties properly. As in any business you are are reliant on the integity of your employees.  At least one person will lose their job and as a consequence be blackmarked from working in the financial services sector ever again. The internal compliance team can only randomly select so many accounts to audit thoroughly every year. In the end probably was self disclosure by the Nat West to the regulators. 

The laundering took place between 2013 & 2016. Multiple individuals across various financial crime teams would have missed obvious red flags but no one will be losing their jobs. Although this might be good for the industry with more individual accountability, I'd be surprised if any of the people who fudged up were still performing the same role. NatWest is huge so there won't be any random audits. I also think this started with a criminal investigation into the business which identified the failings of NatWest.

I wouldn‘t be surprised if the fraudsters had infiltrated Natwest by getting onto their payroll, and/or offered backhanders to employees who were in a position to overwrite system and manual controls. Nor would I be surprised if we all, at Natwest or other UK banks, will be have to suffer increased controls. Happy to be proven wrong, obviously.

Whilst criminals do infiltrate banks, there isn't really a single system or control to overwrite. The business would have flagged multiple times, and these were ignored by the very teams who should know better. Like most criminal/FCA investigations, by the time action is taken, things have long since changed. CDD requirements in the UK have already changed/improved massively since 2016. As with most wrong doing by banks, the perpetrators have all probably long moved on!