The Financial Conduct Authority (FCA) has started criminal proceedings against NatWest over allegedly failing to comply with money laundering rules.
The City watchdog claims “increasingly large cash deposits” were made into a UK account, alleging around £365m was paid in, including £264m in cash.
It alleges that NatWest’s systems and controls failed to adequately monitor and scrutinise this activity.
NatWest said it had been co-operating with the FCA.
In a statement, NatWest said it “takes extremely seriously its responsibility to seek to prevent money laundering by third parties and accordingly has made significant, multi-year investments in its financial crime systems and controls”.
No individuals are being charged as part of the proceedings.
The FCA said the case marked the first criminal prosecution under the money laundering regulations and the first against a bank.
The allegations date back to between 2011 and 2016.
The FCA started investigating in 2017, and NatWest has been aware of the probe since then.
NatWest is scheduled to appear at Westminster Magistrates’ Court on 14 April.
Shares in NatWest, which is still 62%-owned by the government after its bailout in the 2008 financial crisis, were down 1% in early trading.
At the time of that bailout the banking group’s name was Royal Bank of Scotland, but it switched to the NatWest name last year.
The BBC understands that the allegations that NatWest failed to adequately guard against money laundering are in connection with a money service business. That would fit the profile of a company that processes huge amounts of cash.
Insiders at NatWest sounded genuinely deflated that, after making real progress in resetting the bank’s moral compass after the horrors of the financial crisis and subsequent scandals, the bank formerly known as Royal Bank of Scotland would have its new name NatWest dragged through the mud: “After all the good work we’ve been doing, It felt like the bad old days when this came through.”
Partly as a result of that period, there are some very stiff penalties available for regulators to hand down to companies and individuals.
Fines could easily run into the many tens of millions and the Senior Managers and Certification Regime can exact heavy financial or even custodial sentences on managers who the FCA thinks should have known what was happening under their noses, even if they didn’t.