ABN Amro hit by Dutch money laundering investigation

By Bart H. Meijer

AMSTERDAM (Reuters) - ABN Amro is being investigated for money laundering in a new blow to shares in the Dutch bank, which prosecutors allege failed to report or probe suspicious transactions for years.

The Netherlands has been the target of several inquiries into suspected money laundering and investigators last year estimated that around 13 billion euros ($14.2 billion) was laundered each year through the country between 2004 and 2014, a sum equivalent to roughly 2% of Dutch GDP.

Dutch prosecutors said in March they were evaluating signs of Dutch bank involvement in a money laundering network which allegedly channelled billions of euros from Russia.

"It's extremely worrying that ABN Amro is under investigation by prosecutors," Finance Minister Wopke Hoekstra said on Thursday, adding that the Dutch government is resolved to combat money laundering and "banks have an important gatekeeper function in keeping criminals out".

ABN Amro shares were down 9.9% at 1005 GMT, as the bank said it had no indication of the impact of the inquiry.

Analysts said they were therefore using a record $900 million fine against fellow Dutch bank ING last year as a reference point for any penalty ABN Amro could face.

"This is a clear negative for the shares in our view, particularly in the context of capital return. This represents a clear escalation of the issue. Clearly the dividend for this year is also at risk," analysts at Barclays said.

The move is part of a broader push by prosecutors in Europe to crack down on lax monitoring of illegal transactions via bank accounts and came a day after German authorities raided Deutsche Bank's headquarters over a money laundering scandal at Danske Bank.

The Dutch prosecutors said ABN Amro reported suspicious transactions too late or not at all over a long period, adding it failed to properly investigate client behaviour and did not sever ties with suspect clients in a timely fashion.

They did not disclose the period involved, but said the probe was based on information from the Dutch central bank, which earlier this year ordered ABN Amro to review all Dutch retail clients for possible money laundering or other criminal activities.

ABN Amro, which in August had warned of possible fines over failures in client oversight, was notified of the investigation on Wednesday but was not given further details on the scale of the inquiry, ABN spokesman Jeroen van Maarschalkerweerd said.

"This is a top priority for us, we have always known we had to do things better, but we have also always been clear that an investigation such as this might occur," he added.

NOT RESOLVED

ING was fined in September last year for failing to spot criminal activities financed through its accounts, including bribery payments to foreign officials.

But the Dutch central bank said local banks were still too lax on preventing money laundering.

"This investigation can be seen in light of last year's warning. We stand by this warning, and this investigation underlines that these issues have not been fully resolved yet," Dutch central bank spokesman Tobias Oudejans told Reuters.

In the months following ING's fine, ABN said it had increased anti-money laundering operations at a cost of nearly 200 million euros, with a dedicated staff of more than 1,000.

ABN Amro, which is 56% owned by the Dutch state, employs around 17,950 people, after cutting thousands of jobs as it refocused on the Netherlands.

The bank, which was bailed out in 2008 and re-privatized in 2015, reported a net profit of 693 million euros for the second quarter of this year, up 1% from a year earlier, despite the extra costs for client oversight.

However, ABN Amro shares have lost 40% of their value since reaching a 28 euros peak on Jan. 12 this year.

($1 = 0.9137 euros)

(Additional reporting by Toby Sterling; Editing by Deepa Babington and Alexander Smith)