NatWest’s reluctance to enter the crypto market should be seen as out of step with the wider financial services ecosystem, according to a leading London lawyer.
Earlier this week, the bank said it has ‘no appetite’ to serve business customers which accept cryptocurrency, as the bank is taking a ‘cautious approach’ following recent money laundering charges.
“We have no appetite for dealing with customers, whether taking them on as new clients or having an ongoing relationship with people, whose main business is backed by an exchange for cryptocurrencies, or otherwise transacting in cryptocurrencies as their main activity,” Morten Friis, the head of the bank’s risk committee, said during an online shareholder event on Wednesday.
His remarks come as a number of big-name companies confirmed they do have the intention to begin to accept cryptocurrency payments.
Most notably, last week WeWork, the shared office space giant, announced it would start accepting cryptocurrencies as a payment method, including Bitcoin, Ethereum, USD Coin and Paxos.
Despite the crypto hype in recent months, the importance of NatWest’s decision should not be underestimated, according to Anita Clifford, a barrister at Bright Line Law in Holborn.
“This decision underscores a growing concern about the use of cryptocurrency to conceal criminal proceeds. From NatWest’s perspective, customers that accept crypto payment are too much of a vulnerability,” Clifford told City A.M.
However, the bank’s decision should be seen in the context of NatWest currently being prosecuted for anti-money laundering failures, she added.
Last month, the Financial Conduct Authority (FCA), launched criminal proceedings against NatWest last month, for alleged failures under money-laundering rules.
The regulator alleges that “increasingly large cash deposits” were made into a NatWest customer’s account, with around £365m paid in, of which some £264m was in cash.
“Irrespective of the outcome of the high-profile criminal proceedings, there is a need for improvement of internal processes and the decision to offload customers with crypto payments is part of a much broader effort to show that anti-money laundering systems are being taken seriously and to regain public trust,” Clifford said.
The FCA claims that NatWest’s systems and controls failed to properly monitor and scrutinise this activity, which took place between November 2011 and October 2016.
Out of step
Despite the criminal proceedings, NatWest’s decision to derisk by rejecting cryptocurrencies is seen by many as out of step with the wider landscape, Clifford continued.
“The latest National Crime Agency’s risk assessment recognises that crypto presented a risk of money laundering and criminal activity but did not place businesses that accept such payments in a high-risk category at all,” she noted.
“Further, certain crypto businesses have joined the anti-money laundering regulated sector and are subject to oversight. To say that crypto presents too much of a risk is a little at odds with the regulatory landscape,” Clifford concluded.