ING slapped with anti-money laundering undertaking after investigation

Dutch bank ING has vowed to fix its anti-money laundering and counterterrorism financing systems, after an investigation by financial crimes regulator AUSTRAC found flaws in the lender’s compliance.

AUSTRAC on Thursday said it accepted a court-enforceable undertaking from ING’s Australian business, with ING promising to beef up its reporting of suspicious transactions, its risk assessments, and its program for complying with anti-money laundering and counterterrorism financing (AML/CTF) laws.

ING has been hit with an enforceable undertaking by Austrac. Credit: AP

The regulator, which has previously imposed record fines on Commonwealth Bank and Westpac, said ING had identified the compliance issues and voluntarily reported them to AUSTRAC in 2020.

AUSTRAC said it had launched an investigation, which identified concerns in relation to AUSTRAC’s AML/CTF program, its monitoring systems and controls, and its reporting to AUSTRAC.

AUSTRAC chief executive Nicole Rose said businesses needed to have robust systems for AML/CTF compliance, and pointed to ING’s co-operation with the regulator and changes it had already made to its systems.

“ING have been fully co-operating with AUSTRAC throughout our regulatory inquiries and have demonstrated an ongoing commitment to addressing concerns about the effectiveness of their AML/CTF systems and controls,” Rose said in a statement.

“I would like to acknowledge the significant work already undertaken by ING in identifying and implementing improvements to their programs. We look forward to continuing to work with them to ensure they meet their obligations under the AML/CTF Act.”

ING launched in Australia more than two decades ago, and has built up a branchless business with about $55 billion in mortgages, which is similar in size to Bendigo and Adelaide Bank’s mortgage portfolio.

ING chief executive Melanie Evans said the bank had prioritised a program to address compliance problems, and it would continue working closely with the regulator.

“AUSTRAC acknowledges we have made significant steps to improve our anti-money laundering compliance measures and made substantial investment in programs of work, all so we can better detect, deter and disrupt the flow of illegal money through the financial system,” Evans said in a statement.

“We will continue to work closely with AUSTRAC to complete this incredibly important program of work.”

ING chief executive Melanie Evans said the bank had had prioritised a program to address compliance problems, and it would continue working closely with the regulator.Credit: Dominic Lorrimer

The enforceable undertaking said AUSTRAC’s concerns centred on ING’s “ongoing customer due diligence”, and its adoption of an AML/CTF program that complied with the law.

Under the undertaking, ING has agreed to appoint an external auditor, and AUSTRAC said it would monitor the bank’s progress to ensure the appropriate changes were made on time.

Entering into an enforceable undertaking is a less severe enforcement option open to AUSTRAC, which can also take civil action, resulting in hefty fines.

AUSTRAC’s 2017 bombshell lawsuit against Commonwealth Bank led to a $700 million penalty, while a late 2019 case against Westpac resulted in a record $1.3 billion fine.

Both of these cases, which uncovered systemic problems in the banks’ AML/CTF compliance, also led to sweeping boardroom and management changes in the two banking giants.

AUSTRAC also opted for an enforceable undertaking with National Australia Bank this year after an investigation that found widespread non-compliance.

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