Having trumped up the risks of unregulated cryptocurrencies earlier this year, Dutch bank ABN AMRO finds itself in the midst of a major alleged money laundering scandal.
On Sept. 26, Bloomberg reported on news of a criminal probe into the bank’s alleged failures to report suspicious transactions and to adequately vet its clients. ABN AMRO — which remains over 50% government-owned after a costly bailout — saw its shares slump by as much as 10.3% in Amsterdam trading.
This represents the highest plummet since June 2016, with the bank’s Additional Tier 1 bonds falling the most in six months, as Bloomberg notes.
Investigation under anti-money laundering and terror financing laws
The Dutch prosecutor’s office further revealed that not only does ABN AMRO face scrutiny over its alleged compliance failures, but it is also being investigated under Dutch anti-money laundering and terror financing laws. Exact details of the investigation have not been disclosed.
Following a warning from the Netherlands’ central bank, ABN AMRO had announced this July that it needed to conduct better due diligence into all of its 5 million retail clients.
It has spent €220m to bolster its procedures in its consumer banking, credit card and small business lending operations — taking a €114 million provision for checks in Q2 in addition to €85 million in 2018. The bank had indicated it could face sanctions from authorities but noted that it couldn’t prepare for a possible fine as the amount could not be estimated at the time.
As the Financial Times has reported, ABN AMRO also tripled its staff numbers to over 1,400 in areas such as compliance, financial crime and anti-money laundering.
The situation imperils the Dutch government’s pledge to eventually sell off its 56% stake in the bank — and the uncertainty is redoubled by the announcement of CEO Kees van Dijkhuizen to leave when his term ends in April 2020.
Notably, ABN AMRO’s rival ING Group last year paid a record fine for “serious shortcomings” in working to prevent financial crime, facilitating money laundering through its accounts for years.
Banks under scrutiny
ABN AMRO’s crisis comes hot on the heels of a scandal involving Danske Bank’s unit in Estonia, whose former head was found dead earlier this week. He had been a witness — though not a suspect — in a major money-laundering probe into the unit.
Also this week, law enforcement officials raided Deutsche Bank AG this week in connection with the Danske Bank scandal.
This May, ABN AMRO’s senior press officer revealed that the bank would discontinue its plans to launch a custodial Bitcoin (BTC) wallet, having concluded that “cryptocurrencies because of their unregulated nature are at the moment too risky assets for our clients to invest in.”