European banks have a major money laundering problem, with the overwhelming majority of lenders in the region falling foul of the law.

The overwhelming majority of Europe’s largest banks – 90 per cent – have been punished in some way for money laundering offences, with at least 18 out of Europe’s top 20 banks fined in the last 10 years, according to a data firm. The figures come out at a time when Europe’s financial sector has been rocked by scandals in Estonia, Malta, Latvia and Denmark, among others.

UK-based Fortytwo Data, which specialises in big data, anti-money laundering and sanction-screening technology, said that all 10 of the biggest banks in Europe have fallen foul of the AML authorities - HSBC, Barclays and Lloyds from the UK, the French quartet BNP Paribas, Crédit Agricole Group, Société Générale and Groupe BPCE, Germany’s Deutsche Bank, Spain's Santander, and the Dutch bank ING.

Recent weeks have seen banks such as Copenhagen-based Danske Bank, put under the spotlight, leading to the resignation of its CEO and the launch of a criminal probe by the US Department of Justice. That saga – linked to claims of money laundering via Estonia – has helped fuel calls for the European Union to take a tougher, more co-ordinated line on dirty money. 

Other banks to have been fined in recent years are the British banks RBS and Standard Chartered, Italy’s Intesa Sanpaolo SpA, UBS and Credit Suisse, Spain’s Banco Bilbao, the Dutch institution Rabobank, and Nordea Bank. All five major UK banks - HSBC, Barclays, Lloyds, RBS and Standard Chartered - have been fined for money laundering offences. Earlier this year, Donald Toon, director of prosperity at the National Crime Agency, admitted in a Treasury Meeting that money laundering in the UK is “a very big problem” and estimated that the amount of money laundered here each year has now risen to £150 billion ($195.6 billion).

“Money should not be laundered on their watch. However, standards must be maintained. The fact that almost all of Europe’s 20 biggest banks are known to have failed to comply with AML regulations is a troubling finding,” Julian Dixon, CEO of Fortytwo Data, said.

A number of specialist firms such as smartKYC, AxiomSL and others have developed systems to help bankers keep on top of know-your-client and money laundering threats. 

In 2014, BNP Paribas was fined $8.9 billion by the US for sanctions breaches and failings, a record sum that prompted anger from Paris about how the US was throwing its extra-territorial weight around. The situation caused complaints that US banks have been given a relatively easy international ride.

In Singapore, in May 2016, the local regulator kicked out BSI and Falcon Private Bank, for example, for failings connected to money linked to the state-run 1MDB fund of Malaysia. It also fined Coutts and Standard Chartered. 

(Editor's note: The evidence is damning but, as ever, the question to ask is what can be done about it? Fines are clearly a deterrent if they are large enough, but there remain a number of challenges. To begin with, there is a strong sense that different rules seem to apply to US-based banks than for the rest of the world. However, unfair a perception that may be, the US authorities' aggressive use of extra-territorial power to chase crooks when dollars are used is not often matched on the European side. Technology can play a big role in screening for dubious funds and enforcing rules, but it is not always sufficient, or a substitute in some cases for judgement. Some of the issues come from how money from the former Soviet Union and the Middle East finds a natural first home in Europe, so this is a region more likely than some others to feel the heat. It is not always clear whether the European Union has the means or the will to act sufficiently yet, although countries acting alone can achieve only limited progress. Sadly, when the stakes are high enough, dirty money will find a way of getting through. But clearly, this industry needs to raise its game.)