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Bank profits need to fall in fight against money laundering - ECB's Knot
[AMSTERDAM] Banks need to step up the fight against money laundering and accept lower profits in return, European Central Bank board member Klaas Knot said, after a year in which investigations into criminal use of accounts implicated several EU lenders.
"Banks need to adhere to rules and laws under any circumstance. This has its costs, automatically lowering profitability", Mr Knot, also president of Dutch central bank DNB, said in an interview with Dutch newspaper NRC published on Friday.
"I doubt this is already reflected in the profits banks promise investors."
Banks try to minimize compliance costs in order to keep profits up, Knot said in a reference to Dutch bank ING , which this year paid a record US$900 million fine for systematically failing to spot money laundering through its accounts.
"(ING)...chose profit over compliance and risk management", Mr Knot said. "That was the wrong choice."
DNB said in September that other Dutch banks were also too lax in monitoring clients and transactions.
Further afield, Denmark's largest bank, Danske, is involved in a money laundering scandal in Estonia, and Germany's biggest, Deutsche Bank, also faces money laundering allegations.
"Tens of billions of (euros of) criminal money circulate in our economy, unfortunately also through banks", Mr Knot said. "Banks therefore need to take their role as gatekeepers incredibly seriously."
Failure to stop money laundering and other criminal activities could lead to more fines for banks in coming years.
"ING is working to improve its systems, to prevent this from ever happening again", Mr Knot said. "We have intensified our oversight of this, also at other Dutch financial institutions."