Published On: Tue, Sep 11th, 2018

ING’s CFO quits over money laundering scandal

The resignation comes amid concern about criminal cross-border money flows

ing-bankTHE HAGUE - Dutch bank ING said its chief financial officer had resigned after being singled out as responsible for the compliance failings that allowed companies to launder hundreds of millions of euros and pay bribes.

Koos Timmermans, a 22-year veteran of ING, is the most senior executive to leave the bank over the money laundering affair, for which it has agreed to pay a record €775m in penalties to the Dutch public prosecutor. His resignation comes amid growing concern about a string of high-profile scandals that have exposed weaknesses in Europe’s defences against criminal cross-border money flows and prompted the EU to promise tougher regulatory powers in the area. Earlier this month an investigation into Danske Bank found that as much as $30bn of Russian and ex-Soviet money flowed through its Estonian branch in a single year.

The ING settlement, which was announced last week, has prompted widespread public criticism of the bank’s failings, including from Dutch prime minister Mark Rutte. Finance minister Wopke Hoekstra said the affair had “shaken public faith in the banking sector yet again” and promised to grill bank executives and supervisors about how it happened.

Mr Timmermans was made chief risk officer in 2007 and vice-chairman of the management board banking in 2011. ING said that during the 2010-2016 period in which it was found to have breached anti-money laundering rules, Mr Timmermans was “end-responsible for ING Netherlands”, where most of the wrongdoing happened.

A spokesman for the bank, which was bailed out by the Dutch government after the financial crisis, said the supervisory and management boards decided Mr Timmermans should take responsibility for the money laundering failings after consultations with politicians, regulators, academics and lawyers.

“In light of these circumstances and in consultation with the supervisory board, Koos Timmermans will step down,” the bank said, adding that he would stay in place until a replacement could be found. His payout is capped by Dutch law at one-time fixed pay.  Shares in ING were down slightly at €11.15 in morning trade. Andrew Lowe, banks analyst at Berenberg, said the “well-regarded” Mr Timmermans would be “seen as a loss” for the bank, adding that “the timing is unhelpful, with ING midway through a significant restructuring in its Benelux markets”. ING’s failings were unearthed after the Dutch prosecutor probed wrongdoing at four companies that had accounts at the bank, including $55m in bribes paid to the daughter of Uzbekistan’s president by a unit of Russian mobile operator VimpelCom.

The other ING clients it investigated included a Curacao-based women’s underwear company that allegedly laundered €150m, a Suriname one-man building materials group that is accused of laundering €9m, and a fruit and vegetable importation front company for money laundering. “We deeply regret the shortcomings found and take this matter very seriously,” said Hans Wijers, supervisory board chairman of ING.

“Given the seriousness of the matter and the many reactions among stakeholders since the announcement and in the interest of the bank, we came to the conclusion it is appropriate that responsibility is taken at executive board level.”  Ralph Hamers, chief executive of ING since 2013, last week admitted the bank had not done enough to tighten its compliance operations after being fined $619m by US regulators for breaching sanctions by helping Iranian and Cuban companies move billions of dollars through the US financial system.

He said that in the past 18 months the bank had taken several measures to tighten its compliance, including increasing its staff working on “know your client” and transaction monitoring from 150 to 450. The Dutch bank is one the eurozone’s biggest lenders with €846bn of assets, a market capitalisation of €43bn, and more than 52,000 employees in over 40 countries. Two years ago it announced plans to cut 7,000 jobs in its core Benelux markets to focus on further digitising its operations.

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