ABN Amro faces money laundering and terrorism financing probe

Dutch bank ABN Amro has announced that it is being investigated by the country’s public prosecutor into potential money laundering and financing of terrorism.

The bank said on Thursday it could not give further details of what the public prosecutor is investigating. But it has been warning investors that it could face a fine for lapses in its client due diligence that may have allowed breaches of money laundering and terrorism financing laws.

The Dutch bank’s shares fell 9.3 per cent in early Amsterdam trading on Thursday.

The investigation into ABN Amro reflects growing concern about a string of high-profile scandals that have exposed weaknesses in Europe’s defences against criminal cross-border money flows and prompted the EU to promise tougher regulatory powers in the area.

The Dutch public prosecutor last year imposed a €775m fine on ING after finding that ABN’s larger domestic rival had suffered compliance failings that allowed companies to launder hundreds of millions of euros and pay bribes.

A separate investigation into Danske Bank last year found that as much as €200bn of Russian and ex-Soviet money flowed through the Estonian branch of the Danish bank.

ABN Amro, which is still more than 50 per cent owned by the Dutch government, said it would fully co-operate with the investigation.

The bank said earlier this year that it was spending an extra €220m to tighten its procedures in its consumer banking, credit card and small business lending operations. It has tripled its total staff numbers in areas such as compliance, financial crime and anti-money laundering to more than 1,400 in five years.

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Kees van Dijkhuisen said in June that he would step down as chief executive when his term finishes in April. Last year, Olga Zoutendijk quit as ABN’s chairman after falling out with the government, prompting an investigation by the European Central Bank into its governance.

RBS, Fortis and Santander teamed up in 2007 to acquire ABN and break it up in an ill-judged €71bn hostile takeover bid shortly before the financial crisis struck — the biggest ever for a bank, leaving the Dutch government to bail out the remaining domestic lender.

Via Financial Times