Dutch banking’s transaction monitoring utility gets green light

Dutch banks are working together to build a shared utility to monitor financial transactions, after establishing its technical and legal feasibility. 

First mooted last September, the anti-money laundering initiative, now known as Transaction Monitoring Netherlands (TMNL), is being created by five banks – ABN AMRO, ING, Rabobank, Triodos Bank and de Volksbank.

TMNL will focus on identifying unusual patterns in payments traffic that individual banks cannot spot. Together, the five banks handle 9.8 billion payment transactions each year, or 27 million a day.

A shareholder agreement has been signed off by the banks.

Dutch banking association NVB estimates that €16bn of criminal money is laundered in the Netherlands each year. The money comes from activities such as drug trafficking, human trafficking, child pornography and extortion. Criminals make every effort to conceal the origin of their funds, and frequently abuse multiple banks for this purpose.

NVB said in September that it would work with the five banks to study whether the plan was feasible, given the technical and legal challenges involved.

Chris Buijink, president of NVB, said the fight against money laundering and the financing of terrorism is a top priority in the banking sector. “Really effective combating of this type of criminality is only possible through closer cooperation,” he said. “This cooperation will have positive consequences throughout the chain, from detection to prosecution. TMNL is an essential collective step that is a world first.”

NVB said its research over the past six months “showed that collective transaction will allow for better and more effective detection of criminal money flows and networks in addition to what banks can achieve individually with their own transaction data”.

Regulators are clamping down on money laundering, which is often linked to serious crime, and banks could face heavy fines for failing to prevent such activity. They therefore have a vested interest in ensuring they are compliant with the regulations in place for catching and reporting money laundering.

Regulations have been in place for several years, and most large banks have systems to track and catch money-laundering activity. Despite this, there are cases where the authorities have fined reputable banks for failing to implement proper anti-money laundering solutions.

ING was fined €775m last year after the regulator said the bank had failed to prevent the laundering of hundreds of millions of euros between 2010 and 2016.