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NatWest pledges action on financial crime amid money-laundering court case

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Holly Williams
·3-min read
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Banking giant NatWest Group has insisted it is making financial crime detection a “key priority” as it faces criminal action by the City watchdog for alleged money-laundering failures.

In a speech to shareholders ahead of the bank’s annual meeting on April 28, NatWest chairman Sir Howard Davies said news last month of the criminal case was “disappointing”.

“Detecting and preventing financial crime to protect people, families and businesses is a key priority for the group,” he told investors.

Open Forum 2015
NatWest chairman Sir Howard Davies said news of the FCA’s criminal proceedings against the bank was ‘disappointing’ (Philip Toscano/PA)

He said NatWest now has 4,000 staff dedicated to detecting and preventing financial crime.

He added the group has invested nearly £500 million into anti-money laundering systems and controls in the past three years alone.

But he said the bank “cannot tackle financial crime in isolation”.

He said: “We work with other organisations, including industry bodies, law enforcement agencies, regulators and governments to help find solutions to this shared problem and to improve our own approach.”

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His comments at the virtual event come after the Financial Conduct Authority (FCA) last month launched criminal proceedings against NatWest for alleged failures under money-laundering rules.

It marks the first time the FCA has launched a criminal prosecution under the money-laundering regulations and the first time the rules have been used to prosecute a bank.

The regulator alleges that “increasingly large cash deposits” were made into a NatWest customer’s account, with around £365 million paid in – of which some £264 million was in cash.

The FCA claims that NatWest’s systems and controls failed to properly monitor and scrutinise this activity, which took place between November 11 2011 and October 19 2016.

NatWest, which is 59.8% owned by the Government, was due to appear at Westminster Magistrates’ Court on April 14, but the initial hearing has been adjourned to May 26.

Sir Howard also told shareholders that the group was making “good progress” on its strategy to simplify the business and speed up its digital overhaul.

He said it was “unfortunate” for the group to post losses for 2020, after it was sent into the red by £351 million against operating profits of £4.2 billion in 2019.

It followed a £3.2 billion impairment charge for the year, accounting for loans it expects could fail, to a large extent because of the economic stress caused by Covid-19.

“Most of that provision relates to potential future loan losses, the full extent of which will not be known until the impact of the pandemic on the economy becomes clearer,” Sir Howard said.

He said: “Although the persistent low interest rate environment and ongoing Covid-19 restrictions will continue to challenge the financial performance of all UK banks for the foreseeable future, your group is well positioned to navigate the ongoing uncertainty.”

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