On 4 September 2018, the Public Prosecution Service (PPS) issued a press release stating that ING Bank would be paying EUR 775 million because of serious negligence in preventing money laundering. That, according to the PPS, is a penalty that hurts ING and does justice to the fact that the legal order has been seriously shaken by the offence. Never before has a purely Dutch settlement been reached for such a large amount, let alone for co-contravention of the Money Laundering and Terrorist Financing (Prevention) Act (the “Wwft”). That settlement is the object of vigorous debate.
In recent years, the PPS has tried to remove the impression that (big) companies can buy off their wrongdoing. For the first time, besides a detailed press release with an extensive fact sheet, the Public Prosecution Service has now also published the settlement agreement. In addition, the Chief Public Prosecutor at the National Public Prosecutor’s Office for Financial, Economic and Environmental Offences explained in an interview why the decision had been made to effectuate a settlement, why the PPS is not prosecuting any individuals in this case, and what the advantages of such a settlement are compared to taking the matter to court. With this approach, the PPS is clearly trying to compensate for the lack of public access to the hearing and has also deliberately sought publicity, probably because of the critical comments that could be expected.
Moreover, the PPS is nowadays in fact only prepared to reach a settlement in major cases if an accused party acknowledges that mistakes have been made and thus shoulders a certain measure of responsibility. This is something that an accused party is not always prepared to do at a court hearing. Another important additional advantage of a settlement is that the PPS has the option, in addition to imposing a substantial fine, of enforcing measures that are not simply available in the law, for example having the company improve compliance so as to prevent future criminal offences. That is something that a court cannot do in the context of a hearing. The settlement approach also sets a standard for third parties relatively quickly. A court case – certainly if complex rules such as the Wwft are involved – usually results in long-drawn-out proceedings, with many complex (and incomprehensible) discussions, which are also very expensive for the Dutch state.
On the other hand, settlements do not produce any case law. In the long run, that may pose a threat to development of the law. In addition, there is the call for a judicial decision, also in the case of a settlement – a call, incidentally, that comes not only from the public. In the case of settlements, the positions adopted by the PPS are not subjected to testing, even though in the case of large-scale settlements the question arises more than just once as to whether the PPS has in fact created a full case in terms of evidence, judicial assessment, and punishment.
Given the fact that the settlement amounts are far higher than the fines so far imposed by the courts and in view of the now extensive publicity in the case of a settlement, the question arises as to whether the advantages of a settlement still outweigh the disadvantages of court proceedings. That is certainly the case if individuals are indeed prosecuted, because the PPS’s basic line is that it does not settle with those involved. Then there is a public hearing after all at which all the facts are presented and the name of the company is mentioned repeatedly, and without it being able to defend itself. Where the company’s reputation is concerned, that situation makes it vulnerable.
It should be noted that the settlement with ING is still being contested and several parties have now initiated a "article 12 procedure", a formal complaint about not prosecuting criminal offenses. This involves the Court of Appeal being requested to set aside the settlement and oblige the PPS to institute criminal proceedings against ING employees. The decision by the Court of Appeal may be of great importance for the future of settlements.
The above factors may in future lead to less willingness to settle, on the part of both the PPS and companies. Needless to say, this issue is also a reason for financial institutions to take their Wwft compliance risks in that area even more seriously. Please don’t hesitate to contact us if your company is or may be involved in a criminal investigation and you have questions about it, or about the Wwft.