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Dutch Rabobank Allocates €249m to Improve Due Diligence and Transaction Monitoring Processes

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Netherlands-based Rabobank is to allocate €249m towards improving its anti-money laundering (AML) policies and procedures, following instructions from the country’s central bank to remedy deficiencies. 

In November 2021, Rabobank was warned of shortcomings in its compliance with the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft). These mainly concerned the execution, recording and outsourcing of client due diligence, transaction monitoring and the reporting of unusual transactions.

The Dutch Central Bank (DNB) also informed Rabobank that it would commence a separate punitive enforcement procedure. An outcome on this is still awaited. 

In a February 2022 statement Rabobank said additional efforts to remedy the deficiencies by December 15th 2023 – a timeline imposed by the DNB – will include resolving backlog files in client due diligence and transaction monitoring. The bank has earmarked €249m in its 2021 financial results to address the issue, it said.

“While we have made improvements, we acknowledge that we have not yet remedied the deficiencies in order to adequately meet the requirements of the Wwft,” said Rabobank Chairman, Wiebe Draijer. 

“We are set to continue and increase our efforts to build a robust and future-proof KYC organization. To reinforce this, we will create a new position within the Managing Board with a specific focus on KYC compliance,” he added.

Since 2016, Rabobank has invested €1.6bn in its Know Your Customer (KYC) policy, increasing its compliance staff from 1,700 to 4,900 employees. 

Pattern of Regulatory Enforcement Actions

Rabobank has a history of AML compliance issues. It was fined €1m for poor money laundering checks in 2018, and fined a further €500,000 in February 2021 for KYC deficiencies.

Its US operation also has a record of ongoing failures. In 2018, Rabobank NA pleaded guilty to conspiracy to defraud the US and to corruptly obstruct an examination of a financial institution. Its AML failures saw it process over $360m in illicit funds. 

Announcing a $368m fine, the Justice Department said Rabobank admitted that “its deficient AML program allowed hundreds of millions of dollars in untraceable cash, sourced from Mexico and elsewhere, to be deposited into its rural bank branches in Imperial County, and transferred via wire transfers, checks, and cash transactions, without proper notification to federal regulators as required by law”.  

Bank executives then tried to cover up AML deficiencies in the hope of avoiding regulatory sanctions imposed on Rabobank in 2006 and 2008 for nearly identical failures.

Rabobank is just one of a number of Dutch banks to be pulled up on AML failures in recent years. 

ING and ABN AMRO were fined €775m and €480m respectively after reaching out of court settlements.

The problems experienced by these Dutch banks serve as a reminder for firms to ensure that, when issues do occur, they’re able to map out, test and validate reforms in a timely manner. This includes evaluating the use of automation in areas like remediation, enabling expert staff to focus their efforts more strategically.

Uncover details about the State of Financial Crime in 2022 in our new guide.

Netherlands-based Rabobank is to allocate €249m towards improving its anti-money laundering (AML) policies and procedures, following instructions from the country’s central bank to remedy deficiencies.  In November 2021, Rabobank was warned of shortcomings in its compliance with the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft). These mainly concerned the execution, recording and outsourcing of client due diligence, transaction monitoring and the reporting of unusual transactions. The Dutch Central Bank (DNB) also informed Rabobank that it would commence a separate punitive enforcement procedure. An outcome on this is still awaited.  In a February 2022 statement Rabobank said additional efforts to remedy the deficiencies by December 15th 2023 – a timeline imposed by the DNB – will include resolving backlog files in client due diligence and transaction monitoring. The bank has earmarked €249m in its 2021 financial results to address the issue, it said. “While we have made improvements, we acknowledge that we have not yet remedied the deficiencies in order to adequately meet the requirements of the Wwft,” said Rabobank Chairman, Wiebe Draijer.  “We are set to continue and increase our efforts to build a robust and future-proof KYC organization. To reinforce this, we will create a new position within the Managing Board with a specific focus on KYC compliance,” he added. Since 2016, Rabobank has invested €1.6bn in its Know Your Customer (KYC) policy, increasing its compliance staff from 1,700 to 4,900 employees. 

Pattern of Regulatory Enforcement Actions

Rabobank has a history of AML compliance issues. It was fined €1m for poor money laundering checks in 2018, and fined a further €500,000 in February 2021 for KYC deficiencies. Its US operation also has a record of ongoing failures. In 2018, Rabobank NA pleaded guilty to conspiracy to defraud the US and to corruptly obstruct an examination of a financial institution. Its AML failures saw it process over $360m in illicit funds.  Announcing a $368m fine, the Justice Department said Rabobank admitted that “its deficient AML program allowed hundreds of millions of dollars in untraceable cash, sourced from Mexico and elsewhere, to be deposited into its rural bank branches in Imperial County, and transferred via wire transfers, checks, and cash transactions, without proper notification to federal regulators as required by law”.   Bank executives then tried to cover up AML deficiencies in the hope of avoiding regulatory sanctions imposed on Rabobank in 2006 and 2008 for nearly identical failures. Rabobank is just one of a number of Dutch banks to be pulled up on AML failures in recent years.  ING and ABN AMRO were fined €775m and €480m respectively after reaching out of court settlements. The problems experienced by these Dutch banks serve as a reminder for firms to ensure that, when issues do occur, they’re able to map out, test and validate reforms in a timely manner. This includes evaluating the use of automation in areas like remediation, enabling expert staff to focus their efforts more strategically. Uncover details about the State of Financial Crime in 2022 in our new guide.

Originally published February 18, 2022, updated May 5, 2022

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