Anti-money laundering checks expensive, ineffective & discriminatory: Court of Audit

Anti-money laundering checks by banks are expensive, while also being likely ineffective and even discriminatory, the Netherlands Court of Audit concluded.

Banks are legally required to carry out checks to prevent money laundering and terrorism financing. The checks cost them approximately €1.6 billion per year.

But the effects are unclear because the responsible Minister and regulator, De Nederlandsche Bank (DNB), don’t conduct any evaluations. It is therefore unknown how often a reported suspicion actually involved money laundering.

At the same time, the consequences for customers can be significant. For example, money laundering suspicions have resulted in current and former politicians or religious institutions having trouble opening bank accounts or being unable to transfer money to family or companies abroad.

The Court of Audit also suspects that the checks are discriminatory. In almost 62 percent of the reports, the person investigated had a foreign-sounding surname. “This is disproportionate to the number of people with an immigration background in the Netherlands.”

Several Dutch banks have faced hefty fines for performing inadequate checks according to the Money Laundering and Terrorism Financing Prevention Act. Banks have long complained that these checks consume a great deal of capacity and funds.