Money Matters: NatWest Posts Profits Despite Looming FCA Fine

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By Curtley Bale​


The Story

NatWest has posted its third-quarter results, which has seen its profits triple – despite an impending fine from the FCA for failing to prevent money laundering on multiple occasions between 2012 and 2016. The bank recently pleaded guilty to failure to prevent money laundering and will face a sentencing hearing in December.

What It Means For Businesses and Law Firms

Natwest saw pre-tax profits triple to £1.1 billion. This was up significantly compared to last year’s third-quarter profits of £355 million, Results were buoyed by the bank’s release of £242 million, which it had previously set aside to cover any bad debt or losses incurred during the Covid-19 pandemic. Being able to release the money not only inflated the financial figures, but also highlights a renewed trend towards confidence in business growth post-pandemic.

Although the results appear rosy, the company incurred operating costs of £1.9 billion, 2% higher than analysts expected. NatWest has also set aside £294 million to cover the litigation costs for its failure to prevent money laundering. Despite the high operating costs, the bank has seen full repayment of around £1.1 billion in Covid-19 bounce-bank loans, leading to the company’s share price being up around 40% on the year to date (Evening Standard).

The financial reports are even more surprising in the face of the pending FCA charge. NatWest recently pleaded guilty to three counts of failure to prevent money laundering in relation to Fowler Oldfield, a Yorkshire gold dealer, which deposited £365 million in the bank over five years (CityAM).

A police investigation found the dealer to be engaged in a complex money-laundering scheme, making NatWest liable for failing to monitor and detect any suspicious activity. This marks the first time the FCA has used its criminal money laundering powers since it inherited them in 2007.

The FCA looks set to hit Natwest with a “very large” fine of up to £340 million (BBC; The Guardian). The bank will face a hearing in December in Southwark Crown Court to determine the exact level of the fine.
Interview Reading: Read more on the legal considerations of this money laundering case here.