ING settles up in Italy, Swedbank imposes internal punishments for money laundering and a Citi employee is suspended for theft.

We share our financial regulatory highlights from the week of 3 February 2020.

€30 Million in Fines

ING was ordered to pay a total of €30 million to the Italian government on Tuesday, officially putting to rest an investigation Milan prosecutors launched last March into money laundering allegations at ING Italy. The settlement consists of a €1 million fine and €29 million confiscated directly from ING profits.

The investigation into the Dutch bank’s Italian branch was carried out after law enforcement received reports from several European countries of online scams linked to 310 accounts at ING in Milan. Prosecutors had informed the Bank of Italy, which performed its own investigation from October 2018 through to the beginning of 2019 and identified gaps in the bank’s compliance procedures. As a result, it banned the bank from onboarding new clients.

Both of these actions come on the heels of a separate inquiry from Dutch and US law regulators. That investigation, which concluded in September 2018, resulted in a 775 million euro ($900 million) fine against ING. Officials cited chronic and structural weaknesses that prevented the bank from properly performing due diligence checks and monitoring transactions for several years — a charge ING admitted to, saying they “have made unacceptable mistakes.

ING’s Chief Executive Ralph Hammers affirmed then that the bank has taken steps to improve its AML/CFT procedures as a result of the investigations and findings, and it has continued to invest in regulatory compliance. The Dutch bank reported on Thursday that it earned 1.34 billion euros in profit in the fourth quarter of 2019, which was slightly below estimates. The reason: an increase in regulatory costs and increased spending on their KYC procedures. While the effectiveness of the bank’s investments remains to be seen, it’s clear ING wants to put its money laundering woes behind them.

Internal Punishments

Swedbank’s board has decided against paying the bonuses of 170 executives following the bank’s money laundering scandal last year. A move meant to highlight that regardless of the bank’s performance, AML failures will not be tolerated.

The decision follows the removal of many executives at the top of the bank, the CEO and the head of the Baltics department. It also saves the bank 13 million kronor ($1.35 million) which pale in comparison to the $155 billion of suspected criminal cash, laundered through Swedbank from the Baltic region, and the inevitable fines that are yet to come. Fines projected to be in the billions of dollars. However, the bank has stated that due to its capitalization it will be able to repay any fine issued.

The cancellation of bonuses follows an internal investigation that has cost $114 million so far with the potential to increase by $80 million in 2020.

As part of an effort to show improvement in AML controls and improve trust, the new CEO, Jen Henriksson has shared that the bank will be freezing accounts that cannot explain their transactions. How this will be implemented in practice is yet to be seen, but presumably the bank is examining its AML processes with a critical eye.

Tales of Financial Crime

There were multiple small stories of note that happened this week. Unfortunately, we couldn’t go into all of them in detail so here are a few of our favorites worth talking about.

A Curious Coincidence

A Zimbabwean businessman has been arrested on accusation of money laundering via the forex black market. It’s estimated that he managed to launder over $1.3 million.

Ismail Moosa Lunat was arrested by officials from the Zimbabwe Anti-Corruption Commission (ZACC) on 6 February 2020.

The $1.3 million curiously correlates with a pending case before the courts that involved Lunat. He is accused of fraud for allegedly selling one property worth $1.3 million to two different individuals.

The Pain of Money Laundering

The owner of a pain clinic in Florida, USA, Tom Wynne, pleaded guilty to conspiracy to commit tax evasion, tax evasion and seven counts of money laundering.

These charges come with a maximum penalty of five years in federal prison for each tax crime and 10 years per money laundering count.

Wynne’s clinic, the Pain and Wellness clinic employed doctors to overprescribe opioids such as oxycodone and hydromorphone to patients. He used the illegal proceeds to purchase property in Tampa, Florida.

This case presents a small snapshot into the opioid crisis the US is currently facing and the role that money laundering plays in it.


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