AML Case Could Affect NatWest Results, But Sound Capital Levels Provide a Buffer for Potential Penalties
The Financial Conduct Authority (FCA) announced it has started criminal proceedings against National Westminster Bank Plc (NatWest) on Tuesday 16 March 2021. The FCA has charged NatWest with breaching the UK's Money Laundering Regulations 2007 (MLR 2007), and NatWest is scheduled to appear at Westminster Magistrates’ Court on 14 April 2021.DBRS Morningstar views NatWest's financial performance could be affected by a financial penalty and costs related to risk management issues. Money laundering (ML) cases at other banks have demonstrated that, beyond the significant costs that can be incurred, NatWest may also face reputation issues. Nevertheless, we are not expecting changes in NatWest's senior leadership given most have been appointed well after this ML case and do not appear to be connected to this legacy issue meanwhile no individuals are being charged as part of these proceedings. Lastly, DBRS Morningstar views capital levels as sound, providing NatWest with sufficient room to maneuver additional regulatory requirements, if any.
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