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ABN Amro under investigation for money laundering

ABN Amro

ABN Amro under investigation for money laundering

Shares in Dutch bank fall 12 per cent as it warns of a possible fine for potential due diligence lapses

Dutch bank ABN Amro said it is being investigated by the country’s public prosecutor into potential money laundering and financing of terrorism, sending shares in the state-backed lender tumbling 12 per cent.

The lender allegedly failed to carry out sufficient due diligence and monitoring of customers, a spokesperson for the Public Prosecution Service said. It also allegedly failed to report all suspicious transactions to the government’s Financial Intelligence Unit or reported them too slowly.

The investigation into ABN Amro follows a string of high-profile scandals, including several in the Netherlands, 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.

ING, the Netherlands’ largest lender, received a record €775m fine last year after the Public Prosecutor found its compliance failings had allowed companies to launder hundreds of millions of euros and pay bribes. The company has also been banned from taking on new clients in Italy amid an investigation by local authorities.

Separately, Rabobank last year paid the US government $369m after it tried to cover up weaknesses in its compliance systems that allowed Mexican drug gangs to launder hundreds of millions of dollars.

In the most high-profile money-laundering scandal in Europe, an 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 Public Prosecutor’s investigation. It had previously warned 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.

Earlier this year it pledged to spend an extra €220m to tighten its procedures after the scandals at local rivals. 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.

Kees van Dijkhuizen 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.

Shares in ABN Amro dropped 12 per cent to €15.94.

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