Natwest faces £240m fine over money laundering scandal after ‘gold dealer’ deposited £265million

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Taxpayer-backed NatWest is today facing a fine of up to £340million after admitting it failed to spot a Bradford gold dealer with links to businesses run by Petra Ecclestone’s ex-husband James Stunt laundered £365million over five years despite the bank itself predicting the bent business’ annual revenue would only be £15million.

The 122-year-old jewellery wholesaler Fowler Oldfield deposited up to £1.8million-a-day at the height of the scam as a procession of couriers dropped off bags stuffed with cash at a grubby office on an industrial estate in West Yorkshire. 

At the time of the police investigation into Fowler Oldfield, news reports linked the company to businesses run by Petra Ecclestone’s former husband, James Stunt. Its owner Gregory Frankel, the great-grandson of its founder, was vice-president of Stunt and Co, a gold bullion business where Mr Stunt was chairman.

Police would later raid the premises and smash the network behind the operation later branded money laundering on ‘a massive scale’ – but Britain’s largest business and commercial bank failed to spot it, even when deposits became ‘increasingly large’.

Couriers, summoned by text, were paid by the gold and jewel dealer to carry holdalls stuffed with up to £2million of bank notes to its premises on an industrial estate each day. Inside the run-down office the cash would be unpacked and later deposited into Fowler Oldfield’s Natwest account.

The high street money lender is 55 percent taxpayer owned after a £45 billion state bailout during the financial crisis. Today NatWest admitted allowing the jeweller to launder £365million, including £264million in cash, in the first criminal prosecution of its kind in the UK. 

It could face a potential fine of around £340m under sentencing guidelines, but a judge will set the final level of penalty at Southwark Crown Court on December 8.

The bank today indicated guilty pleas to three offences under the Money Laundering Regulations 2007 of not adequately monitoring customer accounts between 2012 and 2016 at Westminster Magistrates’ Court. It is the first criminal prosecution by the Financial Conduct Authority under the 2007 law. 

Afterwards NatWest’s chief executive Alison Rose spoke of her ‘deep regret’ over the scandal that has tarnished the bank’s reputation and will leave them with a massive fine that will dent their own balance sheet. 

Fowler Oldfield was liquidated following a police raid in 2016 and its assets were left in the hands of the police.

Prosecutions have already resulted in several defendants from the Merseyside area being sentenced in the past two years, including men who transported the cash.

Prosecutors said a courier would be summoned by text message and did not know how much was in each bag they dropped off at Fowler Oldfield, according to a local newspaper report.

Today’s action against NatWest marks the first time a financial institution has faced criminal prosecution under anti-money laundering laws in the UK. 

NatWest now faces a fine of up to £240million.

FCA prosecutor Clare Montgomery QC told Westminster magistrates that when Fowler Oldfield was taken on as a client by NatWest, its predicted turnover was said to be about £15million per annum.

However, it deposited £365million over the space of almost five years, of which £264million was in cash. 

Mrs Montgomery said: ‘The turnover of Fowler Oldfield was predicted to be £15m per annum.

‘It was agreed that the bank would not handle cash deposits.

‘However, it deposited £365million, with around £264million in cash.’

She said, at its height, Fowler Oldfield deposited up to £1.8million a day.

Up to £2million in cash was delivered to Fowler Oldfield every day as part of an ‘extremely sophisticated’ money laundering scheme, a 2019 court case – reported in The Financial Times – revealed.

In the last statement by liquidators for Fowler Oldfield – dated December 2020 and filed at Companies House – they said NatWest was the secured creditor and that the police held the company’s seized assets. 

Today NatWest chief executive Alison Rose said: ‘We deeply regret that NatWest failed to adequately monitor and therefore prevent money laundering by one of our customers between 2012 and 2016.

‘NatWest has a vital part to play in detecting and preventing financial crime and we take extremely seriously our responsibility to prevent money laundering by third parties.

‘In the years since this case, we have invested significant resources and continue to enhance our efforts to effectively combat financial crime.

‘We work tirelessly with colleagues, other banks, industry bodies, law enforcement, regulators and governments to help find collaborative solutions to this shared challenge. These partnerships are crucial to counter the significant and evolving threat of financial crime to society.’

NatWest admitted three offences under the Money Laundering Regulations 2007. It will be sentenced at Southwark Crown Court on or before December 8.

According to laws passed in 2007, financial firms must do everything possible to prevent their services from becoming the tools of criminals.

The case against NatWest is the first criminal prosecution ever undertaken under those 2007 rules.

When handling funds from Fowler Oldfield, the FCA alleged that NatWest failed to properly scrutinise ‘increasingly large cash deposits’.  

Prosecutors said couriers would hand the cash to Fowler Oldfield’s reception and were usually given an envelope containing a token for proof of delivery. The men were paid for transporting the money.

Bags were then unpacked in a counting room behind closed doors at Fowler Oldfield and the amount from each courier recorded in a ledger.

But it was this ledger and CCTV footage that later helped investigators to identify the couriers, after West Yorkshire Police’s economic crime unit raided the site in 2016.

Police were supported by the National Crime Agency, often dubbed Britain’s answer to the FBI, with 12 people arrested for money laundering offences.

When sentencing four couriers, crown court Judge Colin Burn noted that they had been targeted for recruitment because of their debts, often from gambling. One man feared that if he had not delivered the money there would be consequences for himself and his family. 

A source familiar with the probes said a remarkable aspect was the simple methods employed.

‘Money laundering these days can be complicated,’ the source said, adding that the convicted men were ‘doing it the old-fashioned way’.

Natwest previously stated it cooperated with the criminal probe and that it took its anti-money-laundering responsibilities ‘extremely seriously’.