In 2018, ING Groep admitted that criminals had been able to launder money through its accounts and agreed to pay a €775 million penalty to Dutch authorities to settle a probe. Dutch financial crime prosecutors alleged that ING had not properly vetted beneficial owners or investigated unusual transactions flowing through their client accounts. Dutch prosecutors said their investigation began in 2016 after realizing a pattern of violations for a specific company, one of which being where ING accounts were used for bribes paid by VEON, a telecommunications company in Uzbekistan.

Due to the multiple issues of neglectful oversight, the Dutch prosecutors alleged that ING Groep had violated laws on preventing money laundering and financing terrorism de facto from 2010 – 2016. The U.S. Securities and Exchange Commission also sent information requests to ING in connection with the investigations by Dutch prosecutors, but ultimately decided to conclude its investigation without recommending enforcement action against ING.

This is not the first instance of the company facing allegations of this kind and paying fines. In 2012, ING paid a penalty of $619 million for facilitating payments through the U.S. banking system on behalf of Cuban and Iranian clients. Beginning in the 1990s, at the instruction of senior bank management, ING Bank Employees in Curacao omitted references to Cuba in payment messages that were sent to the U.S. so U.S. financial institutions could not identify or intercept prohibited transactions. This practice of removing or omitting information was also practiced by other branches of ING, including those in France, Belgium, and the Netherlands.

More recently, in March 2021, France reprimanded the local unit of ING Groep and imposed a €3 million fine for shortcomings in its controls to prevent money laundering and terrorist financing. A few months later, perhaps in reaction to this assessed fine, although not stated overtly, ING Groep announced a decision after a strategic review that it will be exiting the France Retail Banking market.

Fast forward to early 2022, the proposed shareholder action against ING Groep is being considered by a number of investment groups. The action – once commenced – will represent shareholders who acquired ING stock at the time of the investigations and findings in 2018.

As a result of ING’s criminal behavior, the bank’s market capitalization was reduced by at least €2 billion. Because the statute of limitations from the presumed date of knowledge is rapidly approaching, some entities have created an opportunity for investors to seek redress against ING Groep. This action will give investors the opportunity to participate in an ESG-related collective engagement with ING Bank in relation to these money laundering, terrorist financing, and corrupt practices. The law firms looking to establish a case against ING are requesting and reviewing data from January 1, 2007 through November 1, 2021 and specifically shareholder positions on market close on March 21, 2017.

The jurisdiction for this opportunity will take place in the Netherlands in an opt-in fashion. Compared to other European countries, the Netherlands has been a fruitful jurisdiction for investors to recover lost assets in relation to securities class actions. A few successful settlements include:

• Ageas (f/k/a Fortis) in 2018 at USD $1,542,014,910
• Converium Holdings AG in 2012 at USD $58,400,000
• Royal Imtech N.V. in 2015 for an undisclosed (confidential) amount
• Unilever N.V. in 2007 at USD $408,245,345

Additionally – and most recently – Steinhoff International will soon settle a consolidated investor class action that resolves allegations of accounting irregularities for well over USD $1 billion.

ISS Securities Class Action Services will continue to monitor developments related to ING Groep. If and when the shareholder action officially begins, ISS SCAS will keep its clients up-to-date with key case details, eligibility requirements, loss estimates, and potential deadline dates.

This post comes to us from Institutional Shareholder Services. It is based on the firm’s article, “Shareholders to Allege Money Laundering in Proposed Class Action Against ING Groep,” dated February 8, 2022, and available here.