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NatWest's AML fine is a wake up call for accountants

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NatWest has landed itself in the bill for £270m after ignoring anti money laundering requirements. With all of the dramas of the last year many of us might have let our money laundering obligations slip, too.

21st Dec 2021
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The recent prosecution of NatWest in connection with money laundering offences should act as a wake up call to the more dilatory accountants - which is most of us.

NatWest's compliance failures

The bank has landed itself with fines and costs of just shy of £270m as a result of its failure to implement rigorous money laundering standards that are expected of competent professionals.

Astonishingly, this fine relates to the bank’s activities on a single client and the story beggar’s belief.

Apparently the client, a Bradford-based jeweller with a budgeted turnover of around £15m, deposited almost 25 times that amount over a five-year period, including £264m in cash, some of it in black plastic bin bags.

This wasn't merely a case of a single branch failing to apply the law correctly, the cash payments were deposited up and down the country, although Southall took pride of place at £42m in metal over a year from January 2015.

Alarm bells

We should all look aghast at behaviour on behalf of the bank that quite frankly looks criminal.

If any accountant received a request from a client to deposit even £1,000 in cash or pay a fee in that manner, you have to think that alarm bells would start ringing.

At those levels there might be very reasonable explanations, but once you get up into the millions, anyone employed in the financial services industry should be panicking.

The less polite might initially laugh at NatWest’s great inadequacies and then might start wondering why no employee has found themselves heading for jail.

Has complancency set in?

It might then be time to wonder whether complacency could be setting in at your own practices.

When money laundering originally hit the scene, most firms went overboard in appointing designated individuals, training staff and generally imposing what sounded like comprehensive if tedious regulations to root out potential lawbreaking but also cover the firm’s collective back.

Years later it is all too easy to pay lip service to the money laundering regulations without taking them as seriously as we might. After all, the amount of effort involved in making lengthy reports and filing them with the authorities is something that most of us would very reasonably prefer to avoid wherever possible.

To take a simple example, this accountant has had a number of very serious conversations over the years with firms’ money-laundering officers without ever being asked to complete a formal report. That may be a reflection of the care with which he chooses his clients, good luck or a colleague taking a flyer at the margins of acceptable behaviour.

The general statistics for reports of money laundering suggest that this is representative of the professions as a whole.

Look at your internal operations

Suspicious activity goes on all of the time and very rarely seems to be reported, which means that those who are indulging in criminal behaviour are probably getting away with it far more often than they should.

To compound the problem, we have all had so many problems over the last couple of years that money laundering might very well have fallen way down the list of super urgent issues that need to be addressed.

If your office is closed for months at a time, staff are falling sick on a regular basis, clients cannot be seen in person and some of them have gone bust, while recruitment of key staff is nigh on impossible, there is an awful lot on every one of our plates.

Even so, this horrific story should spur accountants on to take a good look at their internal regulations and operations when it comes to prospective financial crime. If nothing else, perhaps this is the moment to send all staff a reminder of their obligations and ensure that your practice does not follow NatWest into the courts, or at the very least the disciplinary panels of professional bodies.

Replies (4)

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the sea otter
By memyself-eye
21st Dec 2021 12:33

Reporting suspicions is all very good but usually nothing happens.

Thanks (1)
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By Roland195
21st Dec 2021 16:07

I don't understand why every time this subject comes up, the comparative lack of reports from the accountancy profession is viewed so negatively. Obviously the reports from us will be insignificant compared to banking or even solicitors/brokers actively engaging in making transactions on a client's behalf.

Thanks (1)
Replying to Roland195:
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By Paul Crowley
21st Dec 2021 18:42

Add to that the criticism that most accountants are reporting matters that are "trivial"
Good reason for them being trivial: accountants report on the basis that there is no de minimus
We are very unlikely to see daily bin bags with £1M in smelly notes
Financing and laudering for terrorism and crime goes through the Banks, and property businesses
The average person dealing with the self employed on Basic rate tax just does not see organised crime and terrorism

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By Justin Bryant
22nd Dec 2021 11:13

This article's so-called message is nonsense and misconceived. How can an AML story about bin bags full of cash possibly cause accountants to wake up to/from anything where they otherwise wouldn't have? It's totally ridiculous to suggest that's the case. (If the article was about a big fine for a relatively modest AML oversight/breech it would have a valid, credible message, but not for such an obvious and extreme breech as this, where I would sincerely hope no AML lessons are needed for any accountants in the 1st place.)

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