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The Netherlands’ largest lenders have enthusiastically embraced public-private data-sharing partnerships in recent years as awareness of their role as gatekeepers of the financial system and eagerness to enhance their knowledge of criminal operations have grown.

Since 2017, ING, ABN Amro and several other Dutch banks have exchanged expertise and operational intelligence with regulators, investigators and prosecutors through half a dozen platforms aimed at tackling trade-based money laundering, terrorist financing, drug trafficking and other crimes.

But the improved cooperation has occurred against a backdrop of robust regulatory scrutiny and criticism of the Dutch financial services industry’s controls against financial crime, making some institutions newly reticent to share details of their compliance processes.

Recent years have seen regulatory inquiries evolve into criminal cases against ABN Amro, which paid €480 million in April to resolve a range of anti-money laundering violations, and ING, which triggered a record €775 million penalty and disgorgement in September 2018 for similar infractions.

While there are no indications that data shared through the platforms has been used against financial institutions, news of an investigation into a third lender has revived concerns that pursuing criminal charges against banks for AML failures could hinder further cooperation, two senior compliance officers in Amsterdam told ACAMS moneylaundering.com.

Investigators supply banks operational intelligence on suspected terrorists, drug traffickers, and other criminals through at least one of the platforms.

Other platforms target emerging financial-crime risks such as trade-based money laundering, investment fraud and modern slavery, and operate as more of a two-way process in which financial institutions share “knowledge products” on specific threats with regulators and investigators, and how they mitigate them.

“When you start talking about how you’ve set up your processes, what risks you see and how you respond to them, you show the government your cards,” one of the compliance officers said on condition of anonymity. “Am I going to jump in and potentially give my colleagues a problem? Or am I going to take a very close look first to see if I have everything in order?”

Dutch officials acknowledged these tensions in a report last month after evaluating the Financial Expertise Center, or FEC, a partnership of prosecutors, investigators, regulators and other officials formed in 1997 that also coordinates AML-related public-private data-sharing platforms in the Netherlands.

“The interviews repeatedly indicated the complexity of the working relationship with private parties, which takes on an entirely different connotation in the event of supervisory investigations or legal proceedings,” according to the report.

Officials recommended that “explicit attention” be paid to discussing these issues openly with financial institutions during the first quarter of 2021, and striking new agreements “in light of enforcement investigations or more far-reaching procedures towards banks.”

The FEC is “alert to bottlenecks that can impede an effective approach,” a spokesperson for the partnership told moneylaundering.com in an email. “For reasons of confidentiality we cannot say anything about specific agreements … but the aim is to take the public-private partnership further.”

On June 30, two unnamed bankers quoted in a separate review of the Serious Crime Task Force, a public-private forum for identifying key financial nodes within illicit networks, said that criminal investigations into banks conflict with the principles of trust and cooperation on which such partnerships are built.

Ongoing investigations against ING’s former chief executive Ralph Hamers and three former executives of ABN Amro for violations that the two banks committed on their watch have further raised the pressure on financial institutions and their senior managers.

“Collaboration is very important, but we have to make a good case for it,” the first of the two senior compliance officers told moneylaundering.com. “The question is whether the government can really trust a bank, and give us a certain amount of comfort.”

De Nederlandsche Bank, the country’s central bank and primary AML supervisor, disclosed last month that 28 lenders are under remediation agreements, requiring them to address due-diligence failures and other breaches by a certain time period and with close regulatory scrutiny.

Peter van Leusden, a former investigator for the Dutch Fiscal Information and Investigation Service, said that to allay bankers’ concerns, authorities should place clear limitations on how data shared through the fora can be used, and prevent government colleagues tasked with investigating banks from participating in them.

“It is very important to work together to develop red flags and typologies, and as a bank you can learn from the results, including the approaches other banks are taking … and obviously that kind of data can never be used in criminal investigations,” said van Leusden, now an anti-corruption consultant with Partner in Compliance in Amstelveen.

A spokesperson for the Dutch Public Prosecutor’s Office told moneylaundering.com that officials already keep FEC-led data-sharing and cooperation mechanisms “strictly separate” from criminal investigations, but did not elaborate how.

Abroad

The dilemma Dutch banks face is neither new nor confined to the Netherlands.

In September 2019, Deutsche Bank, Commerzbank and 12 other financial institutions in Germany unveiled a new partnership with federal police, AML regulators and the country’s financial intelligence unit to share more granular data on how crime syndicates and terrorists move funds.

The day after the announcement, federal police raided Deutsche Bank’s headquarters in Frankfurt for records of suspicious transactions that the lender processed as a correspondent bank for Danish lender Danske Bank’s affiliate in Estonia.

U.S. officials have established a number of financial intelligence-sharing portals in the two decades since 9/11, with varying levels of success and participation.

Austrac, Australia’s financial intelligence unit and primary AML regulator, has levied $1.5 billion in AML penalties against Commonwealth Bank of Australia and Westpac Banking Corp. in the past three years, and is currently investigating National Australia Bank for similar violations.

But the Fintel Alliance, an Austrac-led partnership between several major banks, remittance firms, gaming companies and agencies from several countries, has thrived, said Nick Maxwell, who leads research into financial intelligence-sharing at the Royal United Services Institute in London.

“It has survived despite investigations and enforcement, which often deal with legacy activity that happened way before the partnership was established,” said Maxwell, adding that regulators must find a balance between ensuring AML compliance through pressure and keeping the door open to receive high-quality data through public-private exchanges.

Contact Koos Couvée at kcouvee@acams.org