ING has agreed to pay a fine of €775m and €100m for disgorgement as it settles regulatory issues in the Netherlands business with Dutch authorities.
The Dutch bank has acknowledged its own shortcomings in implementing customer due diligence policies to prevent financial economic crime at ING Netherlands during the investigated period between 2010 and 2016.
The US Securities and Exchange Commission (SEC) has also sent a notification to ING, stating that it has concluded an investigation and will not recommend SEC enforcement against the bank.
The bank has begun taking measures against several senior employees who were responsible for safeguarding and implementing its Financial Economic Crime Policy Customer Due Diligence (FEC CDD) policies and procedures in ING Netherlands. The measures include holding back variable remuneration and suspension of duties.
ING CEO Ralph Hamers said: “As a bank we have the obligation to ensure that our operations meet the highest standards, especially where it comes to preventing criminals from misusing the financial system. Not meeting those standards is unacceptable and ING takes full responsibility.”
The identified shortcomings in the investigation include CDD files missing or being incomplete, assigning incorrect risk classifications, failure to have periodic CDD review process, failure to exit from business relationships in a timely manner, insufficient functioning of post-transaction monitoring system and wrong classification of clients.
As per the bank, its FEC policies resulted in termination of relationships with thousands of clients. Also, the shortcomings resulted in clients being able to use their bank accounts for inter alia, money laundering practices for a number of years.
The bank also claims that during the investigation, there was neither evidence nor indications that (former) employees cooperated actively with clients who have misused the banking services for potential criminal activities nor there were indications of (former) employees receiving personal gains.
The shortcomings are also not attributable to some individual persons but they were collective shortcomings at all the levels including business, compliance and control functions, the bank stated.
ING in the Netherlands CEO Vincent van den Boogert said: “We take this very seriously. We are taking a number of robust measures to strengthen our compliance risk management and support a strong risk culture and will be making further improvements to ensure we can play a full role in contributing to protecting the integrity of the financial system.”
The bank claims to have taken several measures including the introduction of a programme to ensure compliance with ‘know your customer’ (KYC) and ‘client activity monitoring’ requirements, including enhanced management of customer information and improving effectiveness of the control framework applicable to the FEC domain, especially in relation to client activity monitoring capabilities.
It plans to centralize and simplify operational KYC activities into one ‘KYC Centre’ across divisions, introduce standard processes and tooling, which will allow the bank to manage these activities more effectively.