ING to pay RM3.7b to end money laundering probe

By BLOOMBERG

BERLIN • ING Groep NV agreed to pay €775 million (RM3.73 billion) to settle an investigation by the Dutch prosecutor into issues including money laundering and corrupt practices in one of the biggest fines ever given to one of the country’s banks in a criminal case.

The settlement consists of a €675 million fine and a €100 million “disgorgement” payment, with the total amount taken as a one-time charge in the bank’s third-quarter (3Q) results. Executive board members will give up their bonuses in 2018, according to a statement from the Amsterdam- based bank yesterday.

CEO Ralph Hamers said “preventing the bank from being used for money laundering is a top priority for ING”.

The size of the team that handles customer due diligence in the Netherlands has tripled to 450 full-time positions, and more measures are being taken, he said.

ING shares declined as much as 3.4% yesterday after the announcement, and were down 2.9% at 11:43am in Amsterdam yesterday.

The lender acknowledged “serious shortcomings” in executing customer due diligence policies to prevent financial crime at its Dutch unit from 2010 through 2016.

ING is taking action against a number of current and former senior employees in relation to the case, though it expects to resolve the matter with the US Securities and Exchange Commission without further fines, according to the statement.

The investigation focused on the bank’s role in matters including unusual payments by VimpelCom Ltd to a company owned by a Uzbek government official, the Dutch public prosecution office has said.

VimpelCom Ltd, which has changed its name to Veon Ltd, pleaded guilty in 2016 to violating US corruption laws and agreed to a US$795 million (RM3.29 billion) settlement with US and Dutch authorities in a case related to its subsidiary in Uzbekistan. ING is suspected of failing to report unusual transactions or not reporting them in time, the prosecutor said.

The settlement removes uncertainty, but adds to the bank’s capital pressures, Bruce Hamilton, an analyst at Morgan Stanley, wrote in a note. The €775 million outlay equates to a 24 basis-point hit to common equity Tier 1 capital, a key measure of financial strength, in the 3Q, he said.

Dutch Finance Minister Wopke Hoekstra said ING’s money laundering case is “extremely serious”, ANP reported. He plans to discuss the case with the regulator soon, and will ask ING’s supervisory board for an explanation.