Wednesday, December15, 2021 / 05:46 PM / by The Guardian / Header Image Credit: Yahoo Finance

Bank admitsanti-money-laundering failures after Bradford jeweller deposited 365m Pounds overfive years.

The deposits included Scottish notes, which smelled "musty", as if they had been "stored under the floorboards". Photograph: LukeMacGregor/Reuters.

NatWest has been fined more than 264m Pounds foranti-money-laundering failures that involved black bin liners stuffed full ofcash being deposited, and sums so large that one branch's two floor-to-ceilingsafes proved "inadequate" for storing it all.

The Bradford jeweller Fowler Oldfield's predictedannual turnover was 15m Pounds when first taken on as a client, but it ended updepositing 365m Pounds with the bank over a five-year period, including 264m Pounss incash.

At the time, the National Crime Agency requestedinformation about the customer and said that as this involved a lot of Scottishbanknotes being deposited, "this money may have been related to the trade incontrolled drugs", court documents state. Law enforcement officers believedthat the discovery of large amounts of Scottish banknotes in England was anindicator of criminal activity.

NatWest, part of NatWest Group, pleaded guilty inOctober to three offences of failing to comply with anti-money-launderingregulations. This is related to its failure to properly monitor the activities ofFowler Oldfield between 8 November 2012 and 23 June 2016.

At Southwark crown court on Monday, Mrs. JusticeCockerill fined the bank 264,772,620 Pounds, ordered it to pay 4,297,466  Pounds in costs,and made a 460,047 Pounds confiscation order.

It is the first time a financial institution has facedcriminal prosecution by the Financial Conduct Authority (FCA) underanti-money-laundering laws in the UK.

"Although in no way complicit in the money launderingwhich took place", the judge said, "without the bank's failures, the moneycould not be effectively laundered".

Fowler Oldfield, which was shut down after a policeraid in 2016, was initially marked as "high risk" after NatWest took it on as aclient in 2011, but it was downgraded in December 2013.

Prosecutor Clare Montgomery QC said the firm purportedto be in the business of buying scrap gold which was assayed and sold tojewellers in bars or grain. She said there "was a rapid escalation in theamount of cash" being deposited from November 2013, with figures reaching up to 1.8m Pounds a day, and by 2014 Fowler Oldfield was the "single most lucrative" clientin the Bradford region.

About 50 branches across the country were used to makedeposits, with Southall receiving 42m Pounds in cash between January 2015 to March2016 but no report was made that it was suspicious.

The court heard 700,000 Pounds was paid into the Walsallbranch in a single day.

"At times, thousands of pounds in cash was broughtinto the branch uncounted in big black bin liners", stated the agreed statementof facts. A member of staff later told FCA investigators that they often foundthat the weight of the cash "was too great for the bin liners, which would thenbreak". Staff would have to move the cash into stronger hessian sacks.

"The cash-filled the branch's two floor-to-ceilingsafes. Excess cash and other items had to be stored behind grilles in thevault", said the statement.

NatWest's branch in Halifax, West Yorkshire, received 750,000 Pounds in three days, while the Piccadilly and New Bond Street outlets incentral London, which had "several millions" in deposits, were concerned thatit was more cash than they could deal with.

Concerns were raised at a cash centre over thepresence of Scottish notes, which the court heard smelled "musty", as if theyhad been "stored under the floorboards".

An outgoing manager of another cash centre said theactivity was "the most suspicious money laundering" he had ever seen but thefinancial crime manager took the view there were "macroeconomic reasons" forthe spike in cash deposits.

The court heard NatWest recorded direct cash depositsas cheque deposits between 2008 and March 2017 on the bank's automaticmonitoring system, affecting about 165m Pounds in payments from Fowler Oldfield.

The court heard NatWest has invested 700m Pounds to tacklefinancial crime with another £1bn earmarked over the next five years. ButMontgomery said there were "still concerns on behalf of the FCA", with thecompletion date for one programme pushed back from 2020 to 2023.

John Kelsey-Fry QC, defending, said "the bank realisesthe seriousness of any failure to successfully discharge" its obligations andexpressed "deep regret" on behalf of the board. "It did not escape the bank'ssystem, it did not go under the radar", he said. It was identified andsubjected to scrutiny.

"The quality or adequacy of that scrutiny is anothermatter".

NatWest's chief executive officer, Alison Rose, said: "We deeply regret that we failed to adequately monitor one of our customersbetween 2012 and 2016 for the purpose of preventing money laundering.

"While today's hearing brings an end to this case, wewill continue to invest significant resources in the ongoing fight againstfinancial crime".

Credit:

The post; NatwestFined 264m Pounds After Taking Deposits of Laundered Cash in Bin Bags first appeared in TheGuardian.com on December 13, 2021.  

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