ING Group Fined For Money Laundering, Due Diligence Lapses

Financial crime is drawing scrutiny — and fines — at large financial institutions.

To that end, ING Group said it has agreed to pay 775 million euros — about US$900 million — to settle investigations by Dutch authorities over money laundering and other illicit activities.

Drilling down a bit, Bloomberg noted that the settlement is comprised of a 675 million fine. The remaining 100 million is a disgorgement. The investigations focused on ING’s failure to report unusual transactions in a timely manner, or failure to report them at all.

The total tally will be taken as a charge against third quarter results.

In its statement, the company said that it had uncovered “serious shortcomings” in its efforts to conduct customer due diligence at Dutch operations stemming from the period between 2010 to 2016.  The illegal activities came from what Bloomberg termed “unusual” payments made by VEON (formerly VimpelCom). Veon acknowledged the illegal activities and agreed to its own $795 million settlement with U.S. and Dutch authorities to a firm  owned by an Uzbek official.

ING has said that it expects no further fines with the Securities and Exchange Commission.

Separately, BBC reported that Dutch authorities had “found no evidence” that staff at the bank or its unit had made moves to aid customers who had used services that ultimately were part of possible criminal actions. The fault, said the prosecution, extended to “collective shortcomings at all responsible management levels.” ING has decided to take action against some individuals, including clawing back bonuses.

The 100 million euro disgorgement represents an amount equal to underspend on staffing and due diligence policies. In renewed efforts for KYC and due diligence activities, ING stated that it has been establishing client risk committees across several units.

In Denmark, independent investigations into money laundering show that as much as $30 billion in Russian funds made their way through a Danske Bank’s Estonian branch last year. That finding comes from consultant Promontory Financial, and where Danske’s money laundering scandals stretched from 2007 to 2015.  The volume of illicit activity seems to be swelling — the Irish Times reported that the initial estimates of illegal activities over that span had been pegged at $3.9 billion.

The money laundering activities are not limited to Europe. In Canada, law enforcement agencies are seeing a boost in laundering. Chinese gangs have been known to bring funds through casinos in what is dubbed “the Vancouver method.” Overall, according to authorities with Canada’s financial intelligence agency, as much as $5 billion to $15 billion Canadian dollars are laundered annually.