EU update – March 2021

March 29, 2021

UK regulator has launched criminal proceedings against NatWest in a £365millon money laundering scandal.

It is alleged that £365million was paid into a NatWest customer account over a period of 5 years, and that “controls failed to adequately monitor and scrutinise this activity”. The real headline though is that £264 million of those funds were paid into this account in CASH.

This is the first time the FCA have launched criminal proceedings under the money laundering regulations, but they have confirmed that no individuals will be charged.

That any the size of NatWest would not have a sufficient level of controls in place to detect and investigate this activity is unbelievable. Which then begs the question of how it was allowed to happen, and how was no one concerned or aware of this activity. The account is said to belong to 122-year-old gold dealer firm, Fowler Oldfield which was liquidated in 2016 following an investigation which saw up to £2million in cash delivered to Fowler Oldfield every day as part of a massive money laundering scheme. Some of those charged in that wider case have links to Bernie Eccleston and the Formal 1, a sport often under scrutiny for shady behaviour.

NatWest, formally Royal Bank of Scotland survived the 2008 financial crisis due to a government bailout and is still 60% owner by the UK taxpayer. So, if these criminal charges proceed, the government will be going up against itself in court. NatWest have put aside £3 billion in preparation.

Malta’s former chief of staff Schembri charged with money laundering.

Schembri resigned in November 2019, following his close friend, Yorgen Fenech, being charged with being behind the murder of anti-corruption journalist Daphne Caruana Galizia in October 2017.

The charges against Schembri stem from an investigation after Schembri’s company won a multimillion-euro contract in 2010 to sell a printing press to Allied Newspapers, publishers of Times of Malta. Caruana Galizia had written about alleged money laundering in relation to this contract in a 2016 blog post.

These charges may be just a first blow to Schembri, as two brothers accused alongside Fenech of direct involvement in the murder have asked for a presidential pardon in exchange for supplying prosecutors with information on other men involved in the killing, including a former minister and a “middleman”. Because of the actions and dedication of Caruana Galiizia, hopefully those previously in power and their associates will start to be brought to justice for all of the corrupt activities which she was committed to bringing to light.

London galleries issued with money laundering ‘amber alert’ on top artworks

The National Crime Agency have given London galleries an “amber alert” to stop artwork being used to launder illicit funds. With potentially hundreds of millions of pounds being laundered through art sales and authorities failing to see any significant increase in the number of suspicious activity reports (SAR), the NCA has given art dealers a warning.

Dealers have already been told to respond by filing more SARs highlighting sales where there are concerns about the buyer or seller and the source or destination of the money. If the regulations themselves haven’t pushed the sector to comply and put processes in place, what will this amber warning do? Yes, it may encourage more SARs to be submitted, but will these report’s lead to enforceable action? The ultra-secretive art world has long been used to launder huge amounts of cash, due to the transaction requiring very little information be exchanged. The due diligence has until Jan 2020, been left to the banks. I think it will be a very long time before this sector is anywhere near where it needs to be to help fight financial crime. With such high value items being purchased and sold, its not simple KYC checks needed, but potentially source of funds, and I don’t think the art world is comfortable in asking for what might be seen as personal information.