ABN Amro has become the latest international bank to face financial penalties for perceived deficiencies in its anti-money laundering systems in the UAE, receiving fines from both Dubai and Dutch regulators.
The Dubai Financial Services Authority (DFSA) announced that it had imposed a US$640,000 fine on the Dutch bank’s branch within the DIFC, after its private banking division contravened rules “requiring it to implement appropriate safeguards to prevent opportunities for money laundering”.
The regulator launched the investigation earlier this year in conjunction with the Dutch central bank De Nederlandsche Bank (DNB), following the resignation of six Dubai-based ABN Amro private banking employees for failing to comply with the bank’s internal guidelines.
DNB has separately imposed a fine of €625,000.
The DFSA said that the bank’s failings were widespread and exposed its business, and the DIFC, to a high risk of financial crime and money laundering, but said that it does not allege that any actual money laundering took place.
The freezone’s regulator said that it would have imposed a fine of $1 million were it not for the bank’s initiative to self-report the misconduct, to take significant steps to remediate its deficiencies and to cooperate fully with the DFSA’s investigation.
“Although the contraventions in this matter are serious, ABN [Amro] has taken significant proactive steps to report, investigate and remediate its failings,” said the DFSA’s acting chief executive Bryan Stirewalt.
“ABN [Amro] co-operated fully with the DFSA’s investigation. Consequently, the DFSA has taken these factors into consideration and adjusted the penalty proportionally.”
ABN Amro said in a statement that it “sincerely regrets these irregularities” and would not appeal the fines.
The bank said that it is reviewing the client portfolio of its private banking office in Dubai, and has terminated its relationship with around 80 clients and a number of intermediaries.
The fine comes after the DFSA handed down a record $8.4m fine for similar offences against Deutsche Bank in April.
DFSA said the fine against Deutsche Bank, the largest imposed in its 10-year history, was for “serious contraventions” relating to the bank’s internal governance, client take-on and anti-money laundering processes, which had seen the bank mislead the regulator.
Last year Standard Chartered agreed to all but shutter its SME banking operations in the UAE as part of a $300m settlement with US authorities, after an independent monitoring regime judged that the bank had failed to identify a large number of potentially high-risk transactions for further review, many of which originated from its UAE branches.
More than two thirds of Mena business leaders and senior compliance specialists expect to spend “significantly more” on sanctions and financial crime compliance over the next 12-18 months, with nearly three quarters predicting a significant increase in compliance risk scrutiny from global banks and regulators, according to a survey released yesterday by consultants EY.
“Businesses in Mena need to know how to evolve to keep up with the changing sanctions landscape,” said Michael Aslem, EY’s Mena fraud investigation and dispute services leader.
“For banks, knowing who your customers are and what’s going on in the transactions will require additional time and investment; we’re currently not seeing the required level of scrutiny and investigation that is actually needed.”
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