Following this announcement, one of the fines amounts to EUR 15 million and it was imposed for failing to ensure the sound conduct of business operations. The other totalled EUR 5 million, and it was imposed for deficient anti-money laundering (AML) controls.
The Financial Supervision Act requires that banks and financial institutions ensure the sound conduct of their business operations and offerings. The EUR 15 million fine was imposed because the Volkbank failed to comply with this requirement, being currently subject to direct prudential supervision by the European Central Bank (ECB). According to the official press release, the ECB had asked DNB to open a sanctioning procedure for this prudential non-compliance.
Volksbank has also failed to manage relevant risks, including credit and counterparty risks, capital risks, and operational risks, while also acting in non-compliance with Section 3:17 of the Wft. At the same time, there were shortcomings in the credit and counterparty risk management systems, as well as the internal models for calculating own funds requirements, the remediation programme to improve the internal models, the internal capital adequacy assessment process, and the management of risks related to outsourcing.
The institution’s non-compliance prevented it from having an adequate overview and an overall understanding of the risks to which it was exposed, as well as of the way to manage and mitigate those risks. It also called into question the reliability of the quantification of its required capital, as the non-compliance is mainly due to an ineffective internal governance and internal control framework.
Furthermore, DNB's examination of Volksbank revealed that de bank did not adequately monitor its customers for money laundering and therefore failed to detect risks or did not detect risks in time. This means it is in non-compliance with the Anti-Money Laundering and Anti-Terrorist Financing Act, so DNB also imposed a EUR 5 million fine on de Volksbank.
DNB examined the manner in which Volksbank analysed and assessed its money laundering and terrorist financing risks, while also examining customer files and conducting interviews with relevant stakeholders of the bank. This examination revealed that de Volksbank did not adequately monitor its customers and therefore failed to identify risks in time. Moreover, although de Volksbank has a system that generates alerts about customers and their transactions, the system did not function properly.
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