The failure of ABN Amro and other systemic banks to control money laundering from the perspective of HVA International

by Miltiadis Gkouzouris

Following several fines imposed by national regulatory authorities on banks such as ING and ABN Amro, the systemic banks started a KYC-race (Know Your Customer) to investigate “suspicious” transactions by looking into the history of account holders and shareholders of companies, the private expenses and possessions of shareholders and even the backgrounds of company’s clients. In this race, the banks have hired hundreds of controllers, who are equipped with a very menacing weapon, namely that of being able to block a company’s corporate bank account or even terminate the relationship.

These controllers, often with little to no experience from the corporate world, according to their own account, and with little to no training, enter the KYC-“fight” by randomly selecting a bank account, control some transactions and start posing questions.

For our company, this situation started in May 2019 following a transaction with a client from Lebanon for an insignificant amount (*) . We were contacted by an employee of the bank, and according to the verbal explanation regarding that request, were told that Lebanon was on ABN Amro’s “black list” and every transaction from that country was always controlled by the bank for money laundering so as to ensure its legitimacy.

Following the phone call and after answering all questions, we received an email requesting supporting documentation around the transaction. We reverted with all the relevant documentation: the invoice, the contract with our client, the e-mail communications and all the information about the activities we knew of regarding our client.

Another client from Lebanon 

In March of the following year, we were once again contacted by phone by ABN Amro regarding another client from Lebanon and a transaction for again an insignificant amount.

After going through the same procedure once again, verbally providing all the information about the transaction, the nature of the work we had conducted (avocados), which experts we had sent there, all details of our activities in the country etc., we received an email requesting all documentation around the transaction. Once again we undertook this laborious exercise and provided it to ABN Amro.

A month later, in April 2020, when the pandemic-related lockdowns were in effect worldwide, we were contacted a 3rd time by phone by an inquisitive controller at ABN Amro, inquiring about a payment for another overseas project. Again, after providing all relevant information to the ABN-Amro employee, we were instructed via e-mail to provide documentation around this transaction. Once more, HVA sent all documentation regarding the transaction to the bank’s designated address.

On the 21st of January 2021, a very friendly bank employee called us, this time starting by saying that ABN Amro cares about its customers and wants to know them better, understand their needs and offer assistance with issues they might be facing. We had what we felt was a productive conversation of about 45 minutes where we explained the nature of our activities, the methods we employed to develop large scale agricultural projects abroad and even discussed the historic connection of HVA with ABN Amro from the time that the bank was a colonial company and operated mainly from the Dutch Indies under the name NHM (Nederlandse Handel-Maatschappij/ Netherlands Trading Society), while NHM was the successor of VOC (Verenigde Oost-Indische Compagnie/ United East Indian Company) (read further here, here and here).

The role of a bank

Because of the explanation regarding the purpose of the call given by the KYC-employee, i.e. “to listen to the issues that bank customers have”, we expressed some complaints we had about the service from the bank, including a blockage of the corporate bank account during a transition period of the company’s management, which lasted an inordinate period of time and precipitated problems as we needed to transfer funds to staffers in Africa and the lack of interest in discussing the co-financing of a large project, which is supposed to be the role of a bank and which ABN Amro had earned millions on throughout its more than 7 decades long collaboration with HVA.

We pointed out that with the bank burdening our company with excessive regulatory issues and simultaneously providing inadequate service for business requests, e.g. there are no bank offices anymore where business proposals can be discussed face-to-face with actual people rather than handled by invisible automatons somewhere.

We also pointed out that we were not pleased with how the bank’s KYC investigations were made with the threat of blocking one’s corporate bank account if one did not collaborate. This, we expressed, was a serious threat and should only be iterated if a company was ignoring the bank’s request for KYC-related information.

The bank employee seemed empathetic to our concerns and point of view and genuinely interested to learn more. However, this turned out to be just a ruse, that they were for some reason investigating HVA.

A list of demands from ABN Amro to provide all kinds of information

Rather than see any changes in the bank’s behavior, HVA instead received a list of demands from ABN Amro to provide all kinds of information about its shareholders and sign documents about our involvement in HVA and other companies and to do so in a matter of just a few days.

This necessitated a number of hours of work, but we figured that this was the last we would need to do. But we were wrong. The bank employee reverted with another set of requests, this time demanding:

– details of travel expenses,

– copies of contracts with clients for projects in what was described as high risk countries,

– annual reports,

– cost declarations and invoices from non-inhouse specialists,

– statements regarding the exact works we performed for clients.

Nigeria as a high-risk country ?

We found it bizarre that the bank would list Nigeria as a high-risk country when the Dutch Prime Minister Mark Rutte had recently visited the country and helped close several deals there with Dutch companies.

But again we provided all the requested documentation, explanations etc. as instructed despite the numerous working hours such a ridiculous request inevitably incurred and despite the fact that most of the requested information was accessible via the Chamber of Commerce. The bank could simply have paid a small amount (no more that EUR 15 for a full report) and obtain most of the data they requested but instead felt justified in having us spend our time doing this. For us, time is money, and one would think that a bank would grasp that.

Some time later, the KYC-department of ABN Amro once again contacted HVA with questions regarding the origin of the funds when individual shareholders purchased some shares in the company. Once more we sent proof of origin of funds by sending in tax declarations of the past years. However, the bank was nowhere near done with what had already become a clear case of harassment as opposed to KYC-research, since the amounts involved were negligible.

Bizarre request from ABN Amro’s KYC department

On the 1st of March 2021, HVA received a bizarre request from ABN Amro’s KYC department instructing us to modify the company’s description in the Chamber of Commerce. This was completely irrelevant to KYC, but we complied with the bank’s wishes and changed two words.

On the 29th of March, ABN Amro’s KYC department contacted for the 9th time, this time with a list of requests demanding that we provide explanations and documentation regarding events that had not yet even transpired. They demanded to know:

– details regarding an investment case that had been discussed between HVA partners in copies of e-mail communications that we had provided the bank with in earlier KYC-requests;

– details regarding corporate entities HVA was considering approaching in the future regarding potential collaborations;

– details regarding where HVA was planning to invest in the coming period;

– details regarding the whereabout of HVA’s clients and their activities

The Board of HVA began becoming concerned that ABN Amro’s KYC department had become a Lernaean Hydra, the multi-headed mythical creature that, if one cut off one head, would grow two new ones.

In addition to all this exasperating and amateurish detective work by the bank, they even began inquiring into the origin of real estate even though we explained that it had been privately owned for decades and family owned for centuries.

The author, being a cost engineer and having conducted hundreds of due diligence assignments in every conceivable corporate sector, is well aware of methods and techniques to trace money laundering schemes or suspicious transactions. While there are many ways to do so, it is certainly not achieved by hammering on issues that are of insignificant value and importance. To the contrary, if the bank really wanted to trace suspicious transactions it would be possible to do so in a much more productive fashion.

The bank is making honest companies expend countless hours on pointless exercises and having to fret over having their accounts closed under false pretenses

Seeing as ABN Amro fails to employ an efficient KYC-system, chasing after a 140-year-old agricultural company and mercilessly questioning trivial transactions, this gives rise to the suspicion that ignorant and inexperienced KYC-researchers are provided with lists of bank accounts to be investigated merely to give the impression that KYC is being conducted, i.e. to be able to show to the national authorities that the bank has conducted thousands of controls while managers from inside the bank who are aware of real malicious practices, keep those in the dark and only national authorities can discover those. This means that the bank is making honest companies expend countless hours on pointless exercises and having to fret over having their accounts closed under false pretenses. That is a form of fraud and, quite frankly, almost as insidious as the money-launderers that they are pretending to chase.

This article was written out of frustration with the contemptible KYC-practices of ABN Amro, where ineffectual and pointless routines are incurring costs and loss of time and focus. ABN Amro needs to get a grip on its KYC-department. This also serves as a formal complaint towards the bank, as an online tool to pressure the banks to take KYC seriously and go after the real transgressors instead of harassing law-abiding clients. It is high time that Dutch banks begin to apply professional methods to trace real money laundering activity and we urge the banks to stop pestering hard-working companies merely for the sake of improving their controlling statistics.

(*) Insignificant amount: amounts not higher than EUR 50k

The author of this article, Miltiadis Gkouzouris (see photo) is CEO of HVA International, a well-known company based in the Netherlands established in 1879.