ING apologizes to its customers for years of discriminatory anti-money laundering (AML) practices, a move that shines a spotlight on one of the banking sector’s most persistent dilemmas: how to comply with tough AML regulations without unfairly targeting specific groups. This apology marks a significant milestone for the financial crime compliance sector, as it signals a new willingness among major institutions to address the unintended consequences of risk-based controls. The ING case not only highlights the human impact of compliance strategies but also underscores the need for banks everywhere to ensure fairness and transparency in AML and counter-terrorist financing (CTF) operations.

Anti-Money Laundering Controls and the Risk of Discrimination

Anti-money laundering frameworks are now a central feature of global banking, driven by evolving regulatory requirements from European and national authorities. Banks such as ING are required to comply with comprehensive legislation like the EU’s Sixth Anti-Money Laundering Directive (AMLD6) and the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft). These regulations impose detailed customer due diligence, transaction monitoring, and reporting obligations. While these efforts help fight financial crime and terrorist financing, they also introduce complex challenges around how rules are operationalized.

Discrimination rarely occurs by explicit design in AML programs. Instead, it can result from the ways financial institutions identify and respond to risk. ING, for instance, came under scrutiny after numerous customers, especially those from minority backgrounds, certain faith groups, or with international ties, reported being subject to excessive questioning and repeated demands for documentation. Routine international transfers, remittances during religious holidays like Ramadan, or donations to religious organizations often triggered additional scrutiny, making affected customers feel mistrusted and unwelcome.

The Dutch Wwft obliges banks to take a risk-based approach, adjusting the depth of their investigations based on each customer’s risk profile. However, this discretion can unintentionally reinforce stereotypes, as automated transaction monitoring systems may disproportionately flag patterns common in migrant or religious communities. When frontline staff lack training in cultural or religious practices, or when questions are asked without context, what should be ordinary compliance checks can easily be perceived as prejudicial or intrusive.

Regulatory Pressure and the Compliance Challenge

Over the past decade, European banks have faced mounting pressure to fortify their financial crime compliance programs. Dutch regulators, along with the European Banking Authority (EBA) and the Financial Action Task Force (FATF), have repeatedly emphasized the importance of robust due diligence. ING itself paid a €775 million penalty in 2018 for AML failures, intensifying the bank’s compliance focus.

Yet this environment has led banks to deploy automated risk-scoring models, flagging and reviewing atypical transactions to avoid regulatory breaches. Unfortunately, when these models rely on broad demographic or geographic data, they may inadvertently single out certain populations for more intense scrutiny. For example, cross-border transfers, large cash deposits, or financial activities during cultural events may be flagged as suspicious, even if they are entirely legitimate. Such over-application of controls can leave individuals and community organizations feeling singled out due to their background or habits.

The EBA’s 2021 guidelines on customer due diligence explicitly caution banks not to implement controls in a way that produces unfair or discriminatory effects. Likewise, FATF guidance stresses that effective AML and CTF regimes must not compromise financial inclusion or create barriers for law-abiding groups. The challenge for compliance teams is to walk a narrow path: meeting rigorous AML standards while respecting every customer’s right to fair treatment.

ING’s Commitment to Change and the Path Forward

After acknowledging the shortcomings of its past practices, ING has taken tangible steps to reform its approach. The bank pledged to reduce redundant or unnecessary questioning, particularly in cases where customer information is already known or previously verified. ING also announced plans to establish specialized training programs for its customer service and compliance staff, with a focus on improving cultural literacy and better understanding the context of certain financial behaviors.

These reforms are part of a broader industry trend. To avoid repeating past mistakes and to build a more inclusive financial system, banks are adopting several best practices:

• Cultural Awareness Training: Staff are educated about diverse financial customs, holidays, and community practices, helping prevent unnecessary alarm over legitimate transactions.
• Smarter Transaction Monitoring: Institutions are investing in advanced analytics and artificial intelligence tools that incorporate context and reduce false positives, distinguishing between actual risk and ordinary customer activity.
• Transparent Communication: Banks now aim to explain more clearly why specific information is requested, what regulations require, and how data will be used, reducing suspicion and anxiety among customers.
• Customer Feedback Mechanisms: Institutions are soliciting ongoing feedback from customers, advocacy groups, and religious or community organizations, allowing them to refine procedures and address emerging concerns quickly.
• Balancing Compliance and Inclusion: Banks are increasingly working with regulators and NGOs to ensure that AML controls do not have a disproportionate impact on any group, striving to keep the financial system open and accessible.

National and EU-level authorities reinforce this shift. The European Commission’s 2021 AML Action Plan urges financial institutions to foster financial inclusion and ensure AML/CFT measures do not result in unjust exclusion. Dutch regulators, including De Nederlandsche Bank (DNB), encourage banks to take a proportional approach and regularly assess the real-world impact of their compliance policies.

The Broader Impact: Financial Inclusion and Trust in Banking

The societal impact of discriminatory AML enforcement is profound. When groups feel targeted or excluded, trust in the banking system erodes, and some customers may resort to informal, unregulated channels, undermining both financial inclusion and the overall effectiveness of AML policies. This dynamic is particularly problematic for vulnerable populations, such as recent immigrants, small religious organizations, or charities that depend on transparent access to financial services.

Dutch law, as codified in the Constitution and reinforced by the EU Charter of Fundamental Rights, prohibits discrimination based on religion, ethnicity, or national origin. Banks are required to comply not only with AML and CTF regulations, but also with these foundational principles of equality. Failing to strike the right balance can expose institutions to legal risk, reputational damage, and regulatory sanctions.

As banks like ING adapt their compliance programs, the sector as a whole is moving toward a model that recognizes the importance of fairness, transparency, and proportionality. By engaging with civil society, deploying advanced monitoring systems, and embracing cultural understanding, the industry can create a safer and more inclusive financial environment.

Conclusion: Redefining AML Compliance for a Fairer Future

The case of ING’s apology for discriminatory anti-money laundering practices stands as a wake-up call for the financial sector. While banks must continue to uphold strict standards in the fight against financial crime, they also have a responsibility to avoid unfair or exclusionary practices. ING’s willingness to admit mistakes and pledge reform sets a new standard for transparency and accountability.

Going forward, the most successful institutions will be those that embed fairness and customer respect into every aspect of their compliance operations. This means investing in cultural competence, communicating openly, and constantly reviewing procedures to prevent bias. Only by balancing vigilance against crime with a commitment to equality can banks maintain public trust and fulfill their dual roles as protectors of the financial system and champions of financial inclusion.

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Related Links

• European Commission AML Action Plan 2021
• Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft)
• EU AML Directives – Official European Commission Overview
• European Banking Authority Guidelines on Risk Factors
• FATF Guidance on AML/CFT Measures and Financial Inclusion

Other FinCrime Central Articles About AML Best Practice

• The Daily Challenges for AML Compliance Officers: Navigating Risks and Staying Compliant
• Understanding False Positives in AML Compliance

Source: NL Times

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