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Source: Jirapong Manustrong, Shutterstock
Summary
- Shares of NatWest Group have dropped over 3 per cent in the last three days. The stock regained sharply in the mid-morning deals on Wednesday.
- According to FCA, NatWest Group failed to comply with MLR 2007.
Shares of Edinburgh-headquartered banking giant NatWest Group Plc (LON: NWG) dropped more than 3 per cent in the last three days. The capital market watchdog Financial Conduct Authority had initiated criminal proceedings on Tuesday, 16 March, against the National Westminster Bank Plc in connection to the alleged offences under the Money Laundering Regulations 2007 (MLR 2007).
Shares in focus
The stock extended losses on Wednesday after opening marginally lower from the previous closing price. According to the historical trading data available with the London Stock Exchange, shares of NatWest Group have slumped 3.23 per cent to GBX 184.50 from a market price of GBX 190.65 as on Friday, 12 March.
NatWest Group shares (5-day)
(Source: Refinitiv, Thomson Reuters)
The stock regained sharply in the mid-morning deals on Wednesday and was trading at GBX 187.25 (0856 GMT), up 0.83 per cent. Over 800,000 shares exchanged hands on the bourse, translating into a total traded turnover of more than £1 million within an hour of market opening.
The stock has recently turned positive on a year-to-date basis as it surpassed the stretch of the previous 52-week high level on the 12-month trading scale. Excluding today’s price action, the stock has amassed a gain of nearly 90 per cent in the last six months, while it stands with a yearly gain of more than 40 per cent. During the two-and-half month’s trading period of the present calendar year, the stock has risen a little more than 12 per cent.
NatWest shares, once traded a mark above GBX 6,000 in early 2007, have failed to regain that level. During the Covid-steered stock market crash, the stock suffered a 60 per cent drop from the middle of December 2019 to early April 2020.
FCA probe against NatWest
The proceeding against the NatWest Group is the first criminal prosecution under the MLR 2007 against a banking corporation and the first prosecution initiated by the FCA. According to the FCA, the NatWest Group failed to comply with certain regulations of the MLR 2007 between November 2011 and October 2016. The FCA alleged that the banking group for non-compliance of regulations about handling of funds deposited into accounts operated by a UK incorporated NatWest customer.
In order to prevent the activities of money laundering, the bank was required to conduct and demonstrate risk sensitive due diligence, determining and monitoring the relationship with the customers. Increasingly large deposits to the tune of £365 million were made into customer’s accounts with NatWest, the FCA alleged. Of the £365 million, about £264 million was deposited in cash, it added.
The systems and controls put in place by the NatWest Group failed to scrutinise the alleged matter of money laundering adequately. The FCA has not identified the involvement of any banking officials in the alleged matter of non-compliance of MLR 2007, thereby no individuals are being charged so far. However, the banking group has been directed to appear at the Westminster Magistrates’ Court on 14 April.
The MLR 2007 was primarily instituted with the purpose that the banking corporations, as well as financial entities should make sure that companies are taking reasonable steps and keeping a thorough check to prevent money laundering through their systems.
