De Volksbank Faces Potential Fines Over Money Laundering Safeguards

Dutch lender De Volksbank, a state-owned entity encompassing various smaller Dutch banks, including SNS and ASN, has come under scrutiny from the Dutch central bank (DNB) for its inadequate money laundering prevention systems. As a result, the bank is expected to incur fines for the shortcomings, the institution announced on Friday.

The bank revealed these findings in conjunction with its first-half financial results. Chairman Martijn Gribnau expressed regret that De Volksbank was unable to fulfill its role in ensuring client integrity and conceded its non-compliance with certain legal obligations pertaining to anti-money laundering laws.

Gribnau stated in a release, "We regret that we were not able to fulfill our gate watcher role with respect to client integrity and that we are at this moment in violation of certain legal obligations with respect to money laundering."

The bank is actively engaged in making the necessary changes mandated by the DNB before the set deadline of April 1.

Despite these challenges, De Volksbank reported robust financial performance for the first half of the year. Net profit for the period nearly tripled to 248 million euros ($273 million), compared to 95 million euros during the same period in 2022. This significant increase was attributed to higher interest rates on deposits at the European Central Bank, which bolstered the bank's interest margins.

De Volksbank's situation echoes the experiences of other major Dutch banks. Both ING and ABN Amro have faced DNB complaints regarding deficiencies in their anti-money laundering control systems. ING settled its case by paying a substantial fine of 775 million euros in 2018, while ABN Amro resolved its issue with a payment of 480 million euros in 2021. Meanwhile, Rabobank remains under investigation in relation to similar concerns.

The genesis of De Volksbank dates back to the aftermath of the global financial crisis of 2008-2009. The institution was formed through the amalgamation of several Dutch banks that were nationalized as part of the response to the crisis. As the bank navigates these challenges in its anti-money laundering practices, it underscores the broader imperative for financial institutions to maintain rigorous compliance measures to curb illicit financial activities and maintain the integrity of the financial system.