ABN AMRO on Monday announced it agreed to a €480 million (U.S. $575 million) settlement with the Netherlands Public Prosecution Service to resolve years of anti-money laundering (AML) failings. In the announcement, ABN AMRO CEO Robert Swaak stated, “As a bank we do not merely have a legal, but also a moral duty to do our utmost to protect the financial system against abuse by criminals. In fulfilling this duty, we aim to make a meaningful contribution to a safer society. Regretfully, I have to acknowledge that in the past we have been insufficiently successful in properly fulfilling our important role as gatekeeper. This is unacceptable and we take full responsibility for this.”
At long last, a CEO has asserted banks have a “moral duty” to fight money laundering and protect communities. Of course, these words must be set alongside actions, but they should still be welcomed by all in the global AML community.
Historically, many of us have been shot down for advancing the moral argument. I recollect a time when a manager at Wachovia Bank told me I was not the moral compass of the bank. I agreed with him, but added I was the moral compass of Martin Woods and pointed true north. I then walked away from him and stayed my course; needless to state, he didn’t follow.
When introducing morals to banking policies, processes, and culture, there is a need to demonstrate why doing the right thing in support of communities might not always be seen as the right thing to do by customers and relationship managers. We must join the dots between dirty money and the crimes that generate it. We show the suffering, misery, and devastation caused by drug trafficking, corruption, kleptocracy, human trafficking, and even tax evasion. Most importantly, banks need to encourage employees to champion the moral cause and speak up when others seek to undermine or circumvent it.
Ultimately, there is a prize to be won by those bankers who engender public trust and confidence, which arise out of decision-making based upon good morals. The CEOs who pursue such a strategy will need to be supported by AML professionals who can themselves deliver the message and lead employees in this cause. Regulators will also need to play a part and look at the outcomes that arise from such a strategy, rather than analyzing processes.
The changes required will not be immediately embraced and accepted by all—risk appetites will change, and some relationships will be terminated. It will take time, but in the long term, the moral decisions will protect shareholders and executives.
When it comes to money laundering, the Dutch are fast becoming the most aggressive regulator/enforcer in Europe. The ABN AMRO investigation led to Danske Bank CEO Chris Vogelzang emerging as a suspect. Vogelzang subsequently announced his resignation Monday.
“I am very surprised by the decision by the Dutch authorities,” he said in a statement. “I left ABN AMRO more than four years ago and am comfortable with the fact that I managed my management responsibilities with integrity and dedication. My status as a suspect does not imply that I will be charged.
“However, given the special situation Danske Bank is in and the intense scrutiny the bank is under, particularly in relation to anti-money laundering as a consequence of the still unresolved Estonia matter, I do not want speculations about my person to get in the way of the continued development of Danske Bank. Therefore, I feel that the only right thing is for me to leave.”
Dutch authorities are also undertaking a criminal money laundering investigation into UBS CEO Ralph Hamers for his conduct while serving as CEO of ING Bank. Such actions are causing Dutch banking executives to rethink the risks and threats presented by money laundering.
The change of approach by Dutch authorities has undoubtedly been influenced by public opinion, which is better informed of the crime of money laundering and is consequently less tolerant. In addition, shareholders have demanded action and investigations. Such is their anger and frustration at the increasing level of financial penalties paid for AML failures, which they see as management failures.
Stopping money laundering means making difficult business decisions that will see short-term profits sacrificed for the long-term good. But it can save lives—and perhaps the jobs of some CEOs.
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