FCA Puts its Foot Down Against Money laundering in Banking Sector

Financial Conduct Authority, FCA, is taking action against money laundering in the banking and financial service sector. The proceedings against NatWest is the first action by FCA against a bank. 

A few weeks back, NatWest, a high street bank in the UK made it to the headlines for being the first financial institution that faced criminal charges from the UK’s financial regulator Financial Conduct Authority (FCA). The bank was allegedly found violating the AML (Anti-Money Laundering) laws. According to FCA, NatWest did not carry out proper measures to regulate a large number of payments and transactions through the client’s accounts. 

The prosecution is being brought under the Money Laundering Regulations of 2007 that requires the banks to perform due diligence, on-going monitoring of the clients as well as their relationships with business organizations and close observation of the high-risk clients.

Andrew Lee, an associate in the London white-collar and regulatory defense group at Debevoise & Plimpton, puts the action into context: “Money laundering can involve a range of businesses including casinos and real estate agents. The Gambling Commission, Her Majesty’s Revenue and Customs and the FCA are some of the regulators that can use the legislation to take action against businesses – the FCA regulates financial services, and NatWest is a financial services firm.”

She also agrees that the banks will not be able to fight the regulatory action as the FCA has enough proof. FCA is using criminal powers and it will not take it easy on the banks. These first-ever criminal proceedings against the bank are definitely considered an assertive act from FCA. It shows that the regulator has given out warnings and set a precedent for the banking and financial services firms. It shows that the authorities are willing to go to lengths to fight the financial crimes and the institutions not complying with the AML measures can face serious consequences. The UK is considered a global hub for money laundering and it is a high-time that FCA sends a signal to the industry to eliminate money laundering in the jurisdiction. 

Johanna Walsh, a partner in Mishcon de Reya’s London white-collar crime and investigations practice, says: “The FCA has tended to open these types of cases on a twin-track meaning that they have the option to pursue either the criminal or regulatory route. Traditionally, they have always chosen regulatory action. The MLR is described as under-utilized from a criminal perspective, both the current 2017 regulations and their predecessor the 2007 regulations”.