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Netherlands-based lenders have made “positive” steps towards improving their anti-money laundering systems and controls in the eight months since Dutch authorities assessed a €775 million fine against the country’s largest bank, a senior regulator told ACAMS moneylaundering.com.

The penalty against ING served as a “wakeup call” for some banks and encouragement for others to further overhaul their AML programs, including by hiring thousands of new compliance officers, rebuilding their transaction-monitoring systems and forming partnerships, Remy Jansen, head of integrity at De Nederlandsche Bank, the central bank of the Netherlands, said.

“There’s definitely a different attitude from top to bottom,” said Jansen. “That’s partly a result of negative pressure—no one wants to be the next Danske Bank or Swedbank or face a penalty like ING did—but you do increasingly see banks wanting to take part in initiatives [aimed at] tackling human trafficking, illegal wildlife trafficking or other crimes.”

ING consented to the record penalty and disgorgement in September after admitting that inadequate due diligence and poor transaction screening enabled criminals to launder hundreds of millions of euros “virtually undisturbed” from 2010 to 2016.

Dutch prosecutors attributed the lion’s share of ING’s violations to a poorly staffed compliance department and a related decision to cap the maximum number of alerts generated on certain categories of transactions, sometimes to as low as three per day.

The message has not been lost on the financial services industry, with banks currently investing hundreds of millions of euros to improve their automated screening systems and customer due-diligence processes.

Dutch implementation of the EU’s Fourth Anti-Money Laundering Directive into domestic laws and regulations has also helped drive the improvements, according to Jansen, as have repeated calls by De Nederlandsche Bank, or DNB, for the financial services industry to address its compliance deficiencies.

In September 2017, a year before prosecutors publicly accused ING of “culpable money laundering,” DNB issued guidance stressing the need for banks to regularly familiarize themselves with current money-laundering trends, tailor their risk management to specific categories of clients and report “unusual” transactions in a timely fashion.

Dutch lenders have generally taken those steps, including by adopting new technologies such as machine learning and conducting better risk assessments, said Jansen, but several must update their due diligence files and other datasets to ensure that transactions are properly recorded and analyzed, among other compliance processes.

“Keeping customer data up to date from the outset and continuously, and also smartly monitoring transactions to identify risks—these are where the biggest challenges lie,” Jansen said. “There are still major steps that need to be taken that will require considerable efforts and commitment from the top.”

DNB has taken at least 18 “formal measures” in response to AML violations from 2014 to 2018, including nine monetary penalties against banks. Details on the breaches remain scant as they predate rules introduced last year that require the regulator to publish its enforcement actions.

In March, Triodos Bank, a small lender headquartered in Zeist, became the latest financial institution to confirm it had been the target of DNB enforcement. The lender disclosed in an earnings report last year that the regulator had given it until the end of 2019 to update its due diligence and transaction-monitoring processes.

Other banks have sought to enhance their AML controls on their own initiative.

Moneylaundering.com reported in January that the three largest lenders in the Netherlands, ABN Amro, ING and Rabobank, launched a pilot platform to exchange know-your-customer information associated with corporate accounts.

The three banks may also combine their transaction-screening efforts and partner with Dutch authorities in establishing a new public-private forum to share financial intelligence on organized crime.

“To remain committed to that attitude” is the primary challenge facing the banking sector, Jansen said. “External pressure from supervisors, lawmakers and law enforcement agencies towards the sector will continue to be necessary, because the risk that [AML compliance] will slip away persists.”

The scale of the problem is enormous. In January, the Fiscal Information and Investigation Service estimated that at least €20 billion in illicit funds flow into the Dutch financial system on an annual basis.

Annechien Daalderop, an attorney with NautaDutilh in Rotterdam, said the ING penalty and a new law that requires financial institutions to assign responsibility for AML compliance to a specific board member have helped “cement AML as a board topic.”

Acquiring talented and experienced compliance personnel “can be quite challenging,” however, as major financial institutions often compete for the same candidates, she said.

Contact Koos Couvée at kcouvee@acams.org