Dutch financial supervisors’ informal warnings miss opportunities to use full range of sanctions

Despite two recent high profile out-of-court settlements involving major Dutch banks, some of the Netherland’s supervisors still heavily rely on informal enforcement actions and warning letters according to the Financial Action Task Force (FATF).

In its Mutual Evaluation Report Netherlands-2022, the FATF says that whilst the Dutch Central Bank and the Dutch Authority for the Financial Markets have a good understanding of risk and apply a risk based approach, the heavy reliance of some supervisors on informal measures, such as warning notices, means they do not use the full range of sanctions available to them in a consistent and proportionate way.

Out of court settlements

In April 2021, ABN Amro agreed to pay €480 million (US476 million) in an out of court settlement for violating Dutch anti-money laundering and counter financing of terrorism (AML/CFT) rules.

In September 2018, the public prosecution department reached a €775 million (US$768 million) out of court settlement with ING for failing to properly monitor money transfers for potential money laundering.

Addressing AML/CFT failings

The two banks, alongside Rabobank, make the Netherlands one of the most concentrated banking sectors in the EU, with the three Dutch banks controlling 82 per cent of the sector’s assets.

While describing the out-of-court settlements as “a noteworthy development”, the FATF says that the duration of the AML/CFT failings at ABN Amro and ING suggests that previous actions were not sufficiently proportionate or dissuasive to change the culture within these large organisations and address long term systemic AML/CFT failings.

Justifying ‘low risk’ customers

Moreover, the mutual evaluation suggests that even in the wake of the settlements, some AML/CFT measures appear not be have been sufficiently strengthened.

“In some cases, financial institutions – including larger banks – tend to classify too many customers as low risk without adequate justification,” it says.

Strengthening supervision

The mutual evaluation concludes that priority actions in respect of supervisors include a recommendation that supervisory authorities should continue to make full use of the powers available and rely less on informal measures when significant AML/CFT violations are identified.

The Netherlands should also increase supervisory resources to improve risk-based supervision with varying levels of intensity, the evaluation concludes.

The FATF Mutual Evaluation Report Netherlands-2022 and an executive summary of the report can be downloaded from here.


Categories: Trade Based Financial crimes News

Tags: , , , , , , , , , ,

%d bloggers like this: