Dutch Bank ING Fined 775 Million Euros for Money Laundering

The Netherlands’ biggest bank, ING, was hit with a 775-million euro ($897.25 million) penalty for money laundering, coming on the heels of a Latvian bank closing and Denmark’s biggest financial institution Danske Bank, tied to also laundering money, through its Estonian branch.

The combined scandals involving some of the bloc’s major banks has rocked the European Union and renewed attention on a failure to have cross-border co-operation in tracking the flow of illicit funds, sometimes with the implicit consent of the institutions, but with no major prosecutions.

What jumped out in an investigation of ING, prosecutors said, was a listing for “women’s underwear trader,” for 150 million euros ($173.66 million) that was a key signal of laundered money, Reuters reported.

“It should have been clear to the bank that the monetary flows had little to do with the lingerie trade,” the prosecutors said after imposing the massive fine.

ING was warned as early as a decade ago its money laundering controls were weak, the prosecutor said, but they were ignored. The investigators said the bank wanted profits and left its compliance department understaffed and able only to investigate the “tip of the iceberg”.

ING admitted to shortcomings which had allowed clients “to use their bank accounts for money laundering practices for years” and Chief Executive Ralph Hamers said it had taken “drastic measures” to prevent a repetition without detailing what the steps were.

The prosecutors said $55 million had been paid by telecom group VEON, formerly VimpelCom, out of an account at ING via a Gibraltar-based company to Gulnara Karimova, the daughter of the former President of Uzbekistan.

Despite being alerted, ING took years to alert authorities, they added in their report. The Uzbek Prosecutor General’s office said last year that Karimova was in custody following a conviction for embezzlement.

Investigators said they found two companies importing fruit and vegetables from South America ran up cash deposits of more than a half a million euros, before the bank was alerted and closed the accounts.

The Netherlands’ central bank (DNB) warned ING as early as 2008 its procedures were lax but lead prosecutor Margreet Frohberg told Reuters it didn’t act to toughen them until 2016.

“I fear that countries in Europe are oblivious to fighting financial crime,” Ana Gomes, a Portuguese member of the European Parliament said.

“The system is now designed to allow money laundering. It is full of holes. We need serious European rules with pan-European powers of enforcement,” she added.