The FCA’s use of its anti-money laundering criminal powers

Niall Hearty of Rahman Ravelli considers the Financial Conduct Authority’s willingness to conduct more criminal investigations into money laundering.

The Financial Conduct Authority (FCA) has signalled its willingness to use criminal powers in two more anti-money laundering investigations.

The regulator first used the powers in prosecuting NatWest, which saw the bank fined £264,772,619.95 in December 2021 following convictions for three offences of failing to comply with money laundering regulations.

The FCA told the Financial Times that there are two criminal probes in its total of 40 active cases where financial services companies or individuals are being investigated over alleged failures to check where customers’ money came from. The rest of its caseload is currently made up of 29 regulatory investigations, three civil probes and six “dual-track” cases (where the FCA has yet to decide whether it should be a regulatory or criminal investigation).

While the FCA has had criminal powers in money laundering cases since 2007,  last year’s NatWest prosecution was the first conviction it obtained under the powers. 

It has been reported that the FCA has dropped five criminal investigations into money laundering since July 2020. But the regulator has stressed that such decisions are taken based on the merits of each case, rather than by consideration of the resources required to bring a criminal prosecution.

The FCA has stated that the NatWest investigation involved 30,000 staff hours, 85 witness interviews, 300,000 documents being reviewed and 350 rounds of legal correspondence with the bank.

However determined the FCA is to bring criminal prosecutions when it believes them to be necessary, there is little doubt that it will have to be selective. The sheer amount of resources required, coupled with a burden of proof that is higher than for a civil case, make such an approach a necessity.