7th Oct 2021 by Graham Buck

NatWest faces fine for anti- money laundering lapse

NatWest faces the prospect of a heavy financial penalty after pleading guilty in failing to prevent the laundering of over £360m (US$490m) between 2012 and 2016 by a customer.

"The facts of the case are complex, the likely sentence is a very large fine," Clare Montgomery, a lawyer for the Financial Conduct Authority (FCA) told Westminster Magistrates' Court. The financial regulator announced in March that it was bringing a criminal case against the bank under the money laundering regulations introduced by the UK in 2007.

Montgomery told the court that NatWest faces a potential penalty of £340m, although a judge will decide later in the year whether to impose a fine and the appropriate amount. The bank confirmed that it plans to take a provision in its third quarter results due next month in anticipation of a fine. It added that £700m had been invested over five years in strengthening its money laundering prevention systems.

Suspect figures

The FCA said that NatWest had failed to comply with anti-money laundering (AML) regulations in not investigating suspicious activity relating to Bradford-based jeweller Fowler Oldfield Ltd's account between 7 November 2013 and 23 June 2016. The firm was shut down in 2016 following a police raid.

Montgomery told Westminster magistrates that when Fowler Oldfield became a NatWest client its predicted annual turnover was estimated at only £15m. However, the firm had deposited around £365m in its accounts over five years, of which £264m was in cash – even though it had been agreed that the bank would not handle cash deposits. At one point daily deposits had reached £1.8m.

NatWest conceded that its failures "included weaknesses in some of the bank's automated systems as well as certain shortcomings in adherence to monitoring and investigations procedures."

The bank's chief executive Alison Rose said: "NatWest has a vital part to play in detecting and preventing financial crime and we take extremely seriously our responsibility to prevent money laundering by third parties.

"We deeply regret that NatWest failed to adequately monitor and therefore prevent money laundering by one of our customers. In the years since this case, we have invested significant resources and continue to enhance our efforts to effectively combat financial crime."

BNY Mellon joins Marco Polo network

BNY Mellon has confirmed that it is an active member of the Marco Polo Network, the consortium that provides an open software platform for trade, payments and working capital financing to banks, corporates and other market participants. One report suggests that the bank joined in late 2019 and is just now going public with its participation.

Established in 2016, Marco Polo Network is a cloud-based blockchain-powered network for the simplified, secure and fast exchange of trade data assets in a multi-channel environment. 

Transformative potential

BNY Mellon's participation enables the bank to more efficiently insert liquidity into the international supply chain, providing supply chain finance solutions including both payables financing and receivables discounting to suppliers shipping goods and services to their buyers worldwide.

It will also have real-time visibility into trade finance instruments, such as purchase orders and invoices and their status."Blockchain has the potential to transform the trade finance industry by replacing multiple systems with a single shared record through one distributed ledger," said Joon Kim, Global Head of Trade Finance Product & Portfolio Management in BNY Mellon Treasury Services.

"As all participants in the transaction will be immediately updated of each development in the trade lifecycle, this enables us to extend working capital more quickly and more securely to clients."

Marco Polo now has more than 30 banks as network members and around 20 corporates. Germany's Commerzbank and LBBW and Turkey’s İşbank went into production earlier this year, and Sumitomo Mitsui Banking Corp (SMBC) processed a live transaction in August.