Volksbank slapped with €20 million in fines for mismanagement, AML violations
De Nederlandsche Bank (DNB) has imposed two administrative fines totaling 20 million euros on de Volksbank N.V. for serious regulatory violations, including failures in business operations and deficient anti-money laundering controls.
The penalties, announced on Jan. 30, stem from prolonged and systemic non-compliance with Dutch financial laws, according to DNB. The central bank levied a 15 million euros fine for de Volksbank's failure to ensure sound business operations and an additional 5 million euros fine for its deficient anti-money laundering measures.
DNB determined that between July 5, 2018, and Oct. 11, 2023, de Volksbank consistently failed to comply with the Financial Supervision Act. The law mandates that financial institutions maintain sound business operations by establishing clear governance structures, risk management frameworks, and reporting lines.
The bank's non-compliance was deemed "very serious and protracted," according to DNB. The deficiencies encompassed credit and counterparty risk management, internal capital assessment models, risk controls for outsourcing, and internal governance structures. The European Central Bank (ECB), which supervises de Volksbank, requested that DNB initiate sanction proceedings.
"De Volksbank failed to manage crucial risks, including credit, capital, and operational risks," DNB stated. "This resulted in an inadequate understanding of its risk exposure and called into question the reliability of its capital requirements."
The regulator cited "ineffective internal governance" and "persistent delays in remediation efforts" as primary causes of the violations. Although de Volksbank had been urged over a long period to address the deficiencies, it failed to make necessary improvements in a timely manner.
In determining the fine amount, DNB considered the severity and duration of the non-compliance, the bank’s resources, and its efforts to rectify the deficiencies. The regulator acknowledged de Volksbank's recent steps toward compliance but concluded that the fine was "appropriate and warranted."
DNB also fined de Volksbank 5 million euros for failing to comply with the Anti-Money Laundering and Anti-Terrorist Financing Act between July 1, 2020, and April 26, 2023. The regulator found that de Volksbank did not adequately monitor customers for money laundering risks, leading to delays in identifying and responding to suspicious activities.
According to DNB, as a financial institution, de Volksbank is required to act as a "gatekeeper" to prevent money laundering and other financial crimes. This includes verifying customers' identities, understanding the sources of their funds, and monitoring transactions for unusual patterns. However, DNB's investigation revealed that the bank's monitoring system was ineffective and generated backlogs of unresolved alerts.
"Despite multiple warnings and enforcement actions between 2013 and 2022, de Volksbank failed to achieve sustained compliance with anti-money laundering regulations," DNB stated. "This systemic failure left the financial system vulnerable to illicit activities."
DNB emphasized that tackling money laundering is a national priority due to its role in facilitating serious crimes. It noted that de Volksbank’s repeated non-compliance and delays in implementing remediation efforts warranted the financial penalty.
De Volksbank has six weeks from the date of notification to file an objection against the fines. The bank has not yet publicly commented on whether it intends to contest the penalties.
