Banks should be given more opportunities to exchange information about suspicious customers to combat money laundering more effectively, says Finance Minister Eelco Heinen (VVD). Privacy concerns previously stood in the way of such cooperation.
According to the minister, the current approach leads to high costs and limited effectiveness. Banks now employ some 13,000 employees to monitor transactions, which collectively costs at least €1.4 billion a year.
Moreover, entire sectors, such as car dealerships and coffee shops, are excluded because banks find additional checks there too expensive. This also affects individuals, for example through discrimination or additional questions to customers with foreign surnames.
Heinen questions to the FD whether the collection of rules is producing the right effect. Banks have to balance between privacy rules and risks due to crime. "Entire groups are excluded, there is the risk of discrimination and you see that lending to businesses stagnates."
Heinen called the current situation deadlocked, arguing that privacy concerns, regulatory burdens and tackling money laundering clash. "Keeping the financial system clean is paramount," the minister said.
Despite the fact that privacy remains essential, Heinen advocates collaboration whereby banks can share certain customer data. These include blacklists. This prevents suspicious customers from easily switching to another bank, which would have to start the investigation from scratch again.
He emphasizes that a political discussion and the involvement of the Personal Data Authority are necessary before concrete steps are taken. Heinen points to European regulations that already allow for certain forms of cooperation.
The minister also wants banks to be able to conduct more targeted audits, with a focus on high-risk sectors. This should be combined with easing controls elsewhere. Banks currently shy away from adjustments because of fear of fines for inadequate supervision.
This also means that cooperation cannot be optimal. "What has to stop is this finger-pointing at each other. No matter who you talk to, it's always down to the other," Heinen said. He therefore wants to sit down with all parties to get closer to each other about this.
In addition to addressing money laundering, Heinen wants banks to strengthen competition in the savings market. He urges banks to better inform consumers about alternatives and switching options.
"If that fails, I won't rule out legislation," he concludes to the FD. For example, a ban on tying - where a savings account is only possible with a checking account - could be an option.
The minister stressed that he wants to get rid of the negative sentiment surrounding banks. "It is always about criticism: on profits, low savings rates, or high costs. The economic importance of the sector is forgotten in the process."
