After series of EU scandals, Dutch banks team up to share data, algorithms to strengthen AML compliance, fight money laundering
Several of the largest Dutch banking groups are choosing not to go Dutch when fighting financial crime on the heels of massive European money laundering scandals that have snaked suspicion and scrutiny to regions like Amsterdam and the Netherlands.
Financial services giants including ING Groep NV, Rabobank and ABN Amro Bank NV are working toward a joint venture to share information about transactions occurring across multiple banks and jurisdictions in a bid to better identify the telltale signs of illicit activity and broader ties to larger interconnected organized criminal groups.
The name of the facility will be Transaction Monitoring Netherlands (TMNL), with overarching stewardship coming from the Dutch Banking Association (NVB).
“In the next six months the banks will study whether this is feasible given the technical and legal challenges involved,” NVB said in a statement, adding that other banks could join this initiative at a later stage.
NVB estimated that 16 billion euros in funds tainted by criminals is circulating in the Netherlands, most of which is connected to the illicit drugs trade, a “serious social problem.”
“The banks see it as an important public duty to help solve this problem,” NVB Chair Chris Buijink said in a statement. “They want to rid their systems of criminality and are investing heavily in” in compliance, technology and monitoring systems to that end.
In the new transaction monitoring facility plans, banks would be more aggressively cooperating with the Financial Intelligence Unit (FIU), the Public Prosecution Service, FIOD and for example ministries.
Last year, under AML obligations, the banks reported 68,000 unusual transactions to the FIU, with an estimated 15,000 of these transactions described by the FIU analysts as suspicious. The five banks involved handle 9.8 billion payment transactions every year, amounting to 27 million transactions every day.
The fight against money laundering and the financing of terrorism is a major priority for the banks.
An estimated 5,500 to 6,000 bank employees in the Netherlands are currently working directly and full-time on this problem. In fact, this is an item of attention for every bank employee and the issue is also actively being addressed by banks at international level.
Apart from the banks taking responsibility themselves, effectively dealing with money laundering requires a national (chain) approach.
The banks’ initiative directly follows the Money Laundering Action Plan presented by Ministers Hoekstra (Finance) and Grapperhaus (Justice and Security) in July. The banks are actively supporting this plan. This initiative is an important next step in joining together to combat serious financial criminality, (via the Dutch banking association NVB).
Monroe’s Musings: The move is clearly a response to the ever-widening and still-rumbling Danske Bank scandal, which saw Denmark’s largest lender facing a plethora of probes, investigations, accusations and recriminations in several countries for its monitoring, reporting and handling of some 200 billion euros, or more than $224 billion, in potentially suspicious transactions tied to Russia between 2007 and 2015.
The scandal has sacked some top leaders at banks in Denmark and Sweden and even cast regulators in the regions in harsh lights.
Not surprisingly, the EU Commission and Parliament have voiced concerns and put forth formal measures to create a pan-bloc anti-money laundering (AML) enforcement body that would put member state regulators, not just banks, in the hot seat for compliance failures.
While there will no doubt be technical, legal and privacy challenges aplenty in this Dutch endeavor, it holds great potential to improve the efficiency and effectiveness of financial crime compliance and investigations in the regions involved.
Many large U.S. and international banks are already engaging in similar efforts, over the past decade swimming the data on customers and transactions together with indicia of fraud, money laundering and other financial crimes as an “association of banks” under the broad safe harbor of Patriot Act Section 314(b).
The efforts have made it more difficult for a criminal engaging in illicit activity at one bank to simply walk across the street to another institution and start doing the same things there. Dutch banks have a tough road ahead to mirror similar improvements, but the transaction monitoring sharing facility could be a powerful first start.