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FCA launches its first criminal prosecution under the Money Laundering Regulations 2007

Posted on 16 March 2021

The Financial Conduct Authority ("FCA") today announced that it has commenced criminal proceedings against National Westminster Bank PLC ("NatWest") for compliance related breaches of the now superseded Money Laundering Regulations 2007 ("the 2007 Regulations"). This is the first time the FCA has brought criminal proceedings under the 2007 Regulations, historically, favouring regulatory action against firms that fail to comply with their anti-money laundering obligations. For example, in June last year the FCA fined Commerzbank AG £37,805,400 for failing to implement adequate anti-money laundering systems and controls.

The FCA brings the prosecution under regulation 45 of the 2007 Regulations, which require regulated firms to maintain adequate and effective anti-money laundering systems and controls. It has confirmed that no individuals will be charged in connection with the matter.

The FCA alleges that between 11 November 2011 and 19 October 2016 NatWest failed to adhere to regulations which require firms to conduct and be able to demonstrate the application of due diligence and ongoing monitoring of their business relationships on a risk sensitive basis.

The background facts concern the way in which NatWest handled funds deposited to a number of accounts operated by a UK corporation, understood to be a corporate jeweller and gold dealer which was at the centre of a money laundering investigation and prosecution which concluded in 2019. The FCA alleges that NatWest failed to monitor adequately these accounts, despite deposits amounting to £365 million, of which, £264 million was deposited in cash. NatWest will appear at Westminster Magistrates' court on 14 April 2021.

The FCA was heavily criticised in the press last year for failing to prosecute money laundering breaches. In response to a Freedom of Information Act request submitted by this firm, the FCA disclosed that as at the end of 2020 it had 21 open money laundering investigations, only three of which were opened that year, compared to 42 opened in 2019. The same request also revealed that the FCA closed 18 money laundering investigations in 2020 without taking any action; up on the 11 investigations closed in similar circumstances the previous year. The decision to prosecute NatWest may herald the onset of a tougher approach to anti-money laundering enforcement and banks and other regulated firms should review their AML compliance as a priority.

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