ABN AMRO Punished For AML Shortcomings In Dubai Private Bank

Tom Burroughes Group Editor London 4 November 2015

ABN AMRO Punished For AML Shortcomings In Dubai Private Bank

The Dutch bank has been fined for what authorities said were failings in how it took on clients at its Dubai private banking office.

Authorities in Dubai and Netherlands have fined ABN AMRO, the Dutch bank that is planning an initial public offering as soon as this year or early in 2016, for “serious shortcomings in client acceptance and risk management processes” surrounding measures to combat money laundering in Dubai.

Authorities in the jurisdictions have finished their probes into “previously ascertained irregularities” at the bank’s private banking office in Dubai. De Nederlandsche Bank (DNB) imposed a fine of €625,000 ($682,731). The Dubai Financial Services Authority imposed a fine of $640,000.

The bank said there is no evidence that actual money was laundered. 

Shares in the bank were up marginally around midday today, at €66.6 per share.

ABN AMRO has “pro-actively” terminated its relationship with about 80 clients and a number of intermediaries, while a number of clients ended their relationship themselves.

“DNB and DFSA have observed serious shortcomings in the client acceptance and risk management processes, aimed at preventing money laundering at ABN AMRO’s private banking branch in Dubai,” a statement issued by ABN AMRO today said.

These shortcomings relate to identification of ultimate beneficial owners, insight into clients’ structures, establishing the source of wealth as well as adequate transaction monitoring, the statement said. Other failings were also observed in ABN AMRO’s head office’s oversight of its Dubai branch. 

“DNB has concluded that ABN AMRO did not ensure that the client screening procedures of its office in Dubai complied with the Dutch Act to prevent Money Laundering and Terrorism Financing. The DFSA has concluded that ABN AMRO contravened a number of specific DFSA rules. Both supervisors mitigated their fines on account of ABN AMRO’s cooperative stance during the investigations and the proactive measures the bank has already taken,” the statement said.

“ABN AMRO sincerely regrets these irregularities and will not appeal the fines. The irregularities came to light during an internal investigation conducted by the bank in response to two whistleblower reports,” it said.

“The investigation revealed amongst others that certain staff members had not adhered to the internal rules and regulations of ABN AMRO concerning client acceptance and prevention of money laundering. In accordance with the bank’s zero-tolerance policy, the employment contracts with nine employees have been terminated. Improvement programme After discovering the irregularities, the bank immediately launched a remediation programme, which includes a review of the client portfolio of ABN AMRO’s Private Banking office in Dubai,” it said.

“ABN AMRO expects to complete the review by the end of this year. No new irregularities have been ascertained so far. ABN AMRO has also taken measures to further strengthen its international governance, in part by tightening reporting lines and procedures for escalation to Head office. In addition, the bank is, in the Netherlands and abroad, in the process of proactively reviewing client files to further improve the quality of the bank’s client files,” it added.

The issue comes at an awkward moment for the bank, which as previously announced, it is readying to return to full private ownership, having been bailed out by the Netherlands government more than seven years ago amid the financial crisis. The actions add to punishments meted out to a number of other banks for shortcomings and breaches concerning money laundering rules. For an updated list of miscreants in wealth management, click here.


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