Dutch Central Bank Loses AML Case to Neobank Bunq

Time Stamp: October 18, 2022 8:58 AM
Source Node: 1725498

The Dutch Central Bank (DNB) has lost a
case filed by the Amsterdam-based neobank, Bunq, challenging its anti-money
laundering (AML) strategy.

Bunq announced
on Tuesday that it won the case that questioned DNB’s insistence on adopting a method that
depended on one-sided reports from account holders.

The challenger bank believes that this
system rests “squarely on the honesty of fraudsters” and is “antiquated and ineffective.”

The bank noted that it has been advocating
for the use of modern technology, such as artificial intelligence and machine
learning to effectively fight money laundering.

The European digital bank said it charged
DNB and brought it to court earlier in the year over the issue.

“It’s the first time a bank sued a
regulator over such a fundamental issue, as banks prefer to settle disputes
with DNB behind closed doors,” Bunq
said.

The mobile bank explained that it decided to
sue because of the long-term danger of the AML policy to its users and the
stability of the country’s banking system.

Ali Niknam, the Founder and CEO of Bunq, said the company made history today (Tuesday), adding that the court judgment “has paved the
way for progress.”

Meanwhile, Bunq said that DNB about a month ago
released a study calling for a technology-based approach to AML
efforts.

Manual AML Process

The use of spreadsheets and other manual
processes to meet financial crime control obligations is a major problem among banks,
neobanks inclusive.

The UK Financial Conduct Authority (FCA)
recently disclosed that it found the assessment of financial crime risks among
many banks to be insufficient.

This gap, in addition to the failure to gather
adequate know-your-customer (KYC) data and to enshrine customer due diligence,
especially among high-risk customers, is a great distress to AML efforts, FCA
said.

The cost of onboarding new technology to automate the
process is one source of concern.

However, to address the issue, some banks have
turned to regulatory technology (regtech) solution providers to meet their
compliance obligations.

In May, Brand New Day, a Dutch neobank, onboarded the
services of Sentinels, a regtech
firm that deploys artificial intelligence for transaction monitoring, to scale its
AML control mechanism.

Finance Magnates reports that the
integration will help Brand New Day to save its resources by depending on
Sentinels’ automated development of client risk profiles.

The Dutch Central Bank (DNB) has lost a
case filed by the Amsterdam-based neobank, Bunq, challenging its anti-money
laundering (AML) strategy.

Bunq announced
on Tuesday that it won the case that questioned DNB’s insistence on adopting a method that
depended on one-sided reports from account holders.

The challenger bank believes that this
system rests “squarely on the honesty of fraudsters” and is “antiquated and ineffective.”

The bank noted that it has been advocating
for the use of modern technology, such as artificial intelligence and machine
learning to effectively fight money laundering.

The European digital bank said it charged
DNB and brought it to court earlier in the year over the issue.

“It’s the first time a bank sued a
regulator over such a fundamental issue, as banks prefer to settle disputes
with DNB behind closed doors,” Bunq
said.

The mobile bank explained that it decided to
sue because of the long-term danger of the AML policy to its users and the
stability of the country’s banking system.

Ali Niknam, the Founder and CEO of Bunq, said the company made history today (Tuesday), adding that the court judgment “has paved the
way for progress.”

Meanwhile, Bunq said that DNB about a month ago
released a study calling for a technology-based approach to AML
efforts.

Manual AML Process

The use of spreadsheets and other manual
processes to meet financial crime control obligations is a major problem among banks,
neobanks inclusive.

The UK Financial Conduct Authority (FCA)
recently disclosed that it found the assessment of financial crime risks among
many banks to be insufficient.

This gap, in addition to the failure to gather
adequate know-your-customer (KYC) data and to enshrine customer due diligence,
especially among high-risk customers, is a great distress to AML efforts, FCA
said.

The cost of onboarding new technology to automate the
process is one source of concern.

However, to address the issue, some banks have
turned to regulatory technology (regtech) solution providers to meet their
compliance obligations.

In May, Brand New Day, a Dutch neobank, onboarded the
services of Sentinels, a regtech
firm that deploys artificial intelligence for transaction monitoring, to scale its
AML control mechanism.

Finance Magnates reports that the
integration will help Brand New Day to save its resources by depending on
Sentinels’ automated development of client risk profiles.

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