By Toby Sterling and John O’Donnell AMSTERDAM/FRANKFURT, Sept 4 : When Dutch prosecutors trawled through ING’s books they found a “women’s underwear trader” had been able to launder 150 million euros through the bank’s accounts without ringing alarm bells.
“It should have been clear to the bank that the monetary flows had little to do with the lingerie trade,” the prosecutors said on Tuesday after imposing a 775 million euro ($897 million) penalty on the Dutch bank for its failings.
In fact, ING was warned as early as a decade ago that its money laundering controls were lax, the Dutch prosecutor said, in the latest case highlighting failures in European Union money laundering controls from Latvia to Denmark.
“I fear that countries in Europe are oblivious to fighting financial crime,” Ana Gomes, a Portuguese member of the European Parliament, said following news of the settlement by the largest financial services provider in the Netherlands.
ING’s penalty coincides with European regulators considering whether to tighten regional controls of financial crime and one official with knowledge of the matter said money laundering may be raised at a meeting of EU finance ministers this week.
Latvia, which had styled its banking centre as a financial bridge between Russia and the west, had to close one of its banks after it was accused by the United States of money laundering and breaking sanctions.
Meanwhile, Denmark’s Danske Bank has also been in the spotlight. It has admitted to flaws in its anti-money laundering controls in Estonia and a year ago launched its own inquiry, the results of which are expected this month.
“The system is now designed to allow money laundering. It is full of holes. We need serious European rules with pan-European powers of enforcement,” Gomes added.
Europe has made some reforms, requiring countries to set up centralised bank account registers, but cooperation across borders remains poor and the European Parliament has asked the European Central Bank (ECB), which monitors the bloc’s big banks, to step up its anti-money laundering checks.
The ECB, which declined to comment, has long said its powers are limited, but fresh legislation is unlikely until a new European Parliament takes office after elections next year.
TIP OF ICEBERG
In the case of ING, Dutch prosecutors highlighted a series of lapses that they said followed years when it put profit ahead of controls, leaving the compliance department understaffed and able only to investigate the “tip of the iceberg”.
ING admitted to shortcomings which had allowed clients “to use their bank accounts for money laundering practices for years” and its chief executive Ralph Hamers said it had taken “drastic measures” to prevent a repetition.
The prosecutors also said that $55 million had been paid by telecoms group VEON, formerly VimpelCom, out of an account at ING via a Gibraltar-based company to Gulnara Karimova, the daughter of the former president of Uzbekistan.
Despite being alerted, ING took years to pass the information to the authorities, they added in their report.
The Uzbek Prosecutor General’s office said last year that Karimova was in custody following a conviction for embezzlement. Her Swiss lawyer Gregoire Mangeat said she had been “detained arbitrarily”, adding it was not possible to talk to her.
In another of the cases highlighted by Dutch prosecutors, two companies importing fruit and vegetables from South America ran up cash deposits of more than a half a million euros, before ING was alerted by police. It then closed the accounts.
Prosecutors said that the Netherlands’ central bank (DNB) had warned ING as early as 2008 that its procedures were insufficient, but lead prosecutor Margreet Frohberg told Reuters that it had failed to act in earnest until 2016.
A DNB spokesman said that Dutch banks had begun improving their controls as early as 2008, but moved too slowly: “A minimalist interpretation and a mechanical implementation of the laws is insufficient. More really has to happen.” “The financial sector knows this … but we’re still far from where we need to be,” he said, adding that the Netherlands was increasing penalties and demanding tighter controls.