Yahoo Finance NatWest computer flaws ‘left bank exposed to money laundering risk’
Faulty computer systems at NatWest mean the bank risked a number of clients evading its money laundering checks.
The bank fears that multiple customers might have evaded the safeguarding measures that failed to stop the gold dealership Fowler Oldfield from stashing vast sums of money in its branches and cash centres, court documents show.
NatWest was found guilty of money laundering offences and fined £265m for its handling of the Fowler Oldfield case earlier this month.
The judge said NatWest's failings allowed Fowler Oldfield to launder vast sums of money at the bank after the gold dealership managed to deposit £365m.
In documents released by the Financial Conduct Authority, NatWest said other businesses could also have evaded detection.
The documents said: "There were a number of weaknesses in the monitoring of the Fowler Oldfield account.
"Some of those deficiencies would have affected business relationships with customers other than Fowler Oldfield."
NatWest's computers failed to properly monitor vast sums of cash deposits coming from Fowler Oldfield.
A product that allowed customers to pay notes directly into cash centres wrongly recognised the deposits as cheques between 2008 and 2017. Fowler Oldfield used this to disguise cash payments worth £165m.
An analyst at the bank concluded the faulty system meant £100m a day was misrepresented as cheques. The bank also failed to classify Fowler Oldfield as a high-risk customer for two years.
Court documents reveal that KPMG first identified failings in NatWest's money-laundering controls back in 2010 - a year before it took on Fowler Oldfield as a client.
The bank then set about trying to fix the issues in a number of programmes.
But the FCA found in January 2020 that NatWest was still failing to finish a programme of work assessing risky customers.
The FCA wrote a letter to Alison Rose in October 2020 to complain about delays correcting its records and demand NatWest fix the issue, according to court documents. It launched criminal proceedings against NatWest in March 2021.
Documents reveal the lender's remediation work on the files of risky customers is ongoing and will not be finished until 2023.
But it is understood that NatWest has not discovered any other clients who represent a money laundering risk.
The bank has spent almost £700m on measures to prevent financial crime in the last five years. It has upgraded the computer systems for detecting suspicious activity, and has specifically addressed the errors that led to cash deposits being recognised as cheques.
The bank plans to spend more than £1bn over the next five years to strengthen its controls.
Fowler Oldfield was initially rejected as a customer over concerns it would be dealing in too much cash. The company initially said it would not be depositing cash but later started stashing huge sums in NatWest branches.
A relationship manager failed to conduct regular reviews of NatWest's relationship with Fowler Oldfield.
There is an ongoing criminal case against Fowler Oldfield. Eleven individuals have pleaded guilty in connection with the case, and another trial of 13 suspects is listed for April 2022.
A spokesman for NatWest said: "The bank has undertaken a significant programme of remediation work since 2016, when the concerns relating to this customer first came to light, and is confident that all appropriate steps have been taken in response to the issues identified."
