ABN AMRO to pay $575M in money laundering settlement with Dutch authorities

The NPPS first informed ABN AMRO in 2019 the bank was the subject of a criminal investigation relating to potential violations of the Dutch Anti-Money Laundering and Counter Terrorism Financing Act (AML/CTF Act). Recently, the NPPS added new charges of “damaging money laundering” to the case.

“This settlement marks the end of a painful and disappointing episode for ABN AMRO.”

ABN AMRO CEO Robert Swaak

As part of the settlement agreement, ABN AMRO will pay a fine of €300 million (U.S. $359 million) and €180 million (U.S. $216 million) in disgorgement, which reflects the seriousness, scope, and duration of the identified shortcomings, the NPPS said. Following numerous investigations into ABN AMRO’s compliance with the AML/CTF Act, the agency determined the bank engaged in several “structural and serious” violations and “culpable money laundering” from 2014 to 2020.

Based on findings from its criminal investigation, the NPPS said it found “serious shortcomings” in ABN AMRO’s compliance with the AML/CTF Act, including the following:

• Missing client data or documents or unclear data sources in client files;
• Failing to conduct client due diligence—for example, incorrectly assigning risk classifications to a “considerable” portion of clients;
• Not sufficiently taking into account the expected use of cash when determining the risk profile and risk classification of most of its clients;
• Insufficiently executing ongoing monitoring of its clients, as well as falling short in processing alerts generated by its transaction monitoring system; and
• Failing to terminate, or timely terminate, client relationships with an “unacceptable” risk classification.

“Because ABN AMRO fell seriously short of compliance with the AML/CTF Act, various clients engaged in criminal activities were able to abuse bank accounts and services of ABN AMRO for a long time,” the NPPS stated. “ABN AMRO should have observed that certain flows of money through bank accounts held at ABN AMRO possibly originated from crime. The bank failed to act upon this sufficiently.”

The €480 million total will be counted against the bank’s first-quarter results in 2021.

Patching holes

ABN AMRO said in a press release it fully cooperated with the NPPS throughout the investigation and accepts responsibility for the criminal acts identified. In responding to the settlement agreement, CEO Robert Swaak stated, “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.”

ABN AMRO said while it “has prioritized remediation and enhancement programs in each of the business lines of the bank over the years, as well as bank-wide with respect to transaction monitoring,” it recognized that “despite all of its efforts and intentions, its improvement programs have not always had the desired effect.”

In response to the identified shortcomings, ABN AMRO said it centralized the execution of its “Client Life Cycle” processes in October 2018 by setting up a detecting financial crime (DFC) program and making “substantial additional financial resources available for investments in staff, systems, and processes. The DFC program is progressing according to the timetable … and the program is expected to be completed by the end of 2022.”

By the end of 2020, the total number of full-time employees involved in ABN AMRO’s Client Life Cycle processes increased to 3,800. “The bank is convinced that its current approach is the right way to systematically remediate shortcomings across the bank and to embed this remediation in its day-to-day operations,” ABN AMRO said.

“This settlement marks the end of a painful and disappointing episode for ABN AMRO,” Swaak said. “The lessons we have learned from this experience drive us in our continued effort as gatekeepers to achieve a safer society and a financial system that meets the highest standards of integrity.”

Individual liability

The NPPS said its criminal investigation into three former members of ABN AMRO’s board of directors, “identified as suspects effectively responsible for violation of the AML/CTF Act by ABN AMRO,” is continuing. The NPPS added it “attributes these offenses to the organization as a whole.”

Two of the individuals may be former Danske Bank CEO Chris Vogelzang and board member Gerrit Zalm, who each identified themselves as suspects in the investigation in addition to announcing their resignations Monday.

These individuals will not necessarily be prosecuted by the NPPS. Once it concludes its investigation, the NPPS said it will then decide whether there is “sufficient evidence” these individuals committed criminal offenses before deciding next steps.