ABN AMRO’s Successor RBS N.V.: Dollar Clearing and Payment Stripping

The Federal Reserve assessed ABN AMRO $40,000,000 in December 2005 over Bank Secrecy Act and sanctions-control failures. In the later 2010 ABN AMRO sanctions and BSA case, the former bank, renamed Royal Bank of Scotland N.V., admitted under its deferred prosecution agreement to payment stripping and failures in its New York banking controls.

ABN AMRO’s New York branch operated the North American Regional Clearing Center. The admitted failures reached staffing, training, oversight and customer documentation: the people and information a bank needs to understand the money passing through it. Stripping a payment message cheats the next bank of the information it needs to screen that payment.

The Bank Behind the Changed Name

FinCEN’s December 2005 assessment named the New York branch of ABN AMRO Bank N.V. The Federal Reserve’s order named ABN AMRO Bank N.V. and its New York and Chicago branches. The Justice Department’s May 10, 2010 announcement identified the former ABN AMRO bank as Royal Bank of Scotland N.V.

Royal Bank of Scotland plc, New York Branch, was the subject of a separate December 2013 New York sanctions order. RBS N.V. is the former ABN AMRO bank in this case.

What Is Correspondent Banking in AML?

Correspondent banking lets a bank receive deposits, make payments or process transactions for a foreign financial institution. In dollar clearing, that relationship puts the bank processing the payment between its institutional customer and the activity behind that customer.

A foreign bank may also give other banks access through its correspondent relationship. These nested relationships add distance between the U.S. bank and the people behind the transfers. The bank named on the account can be the immediate customer while other banks and their customers generate the underlying business. That is why customer documentation and payment information have to be read together.

What Are Violations of the Bank Secrecy Act?

Bank Secrecy Act violations include failing to maintain an adequate anti-money-laundering program or report suspicious activity. In its 2005 assessment, FinCEN alleged that ABN AMRO’s New York clearing center lacked adequate controls, staffing and training for dollar clearing and suspicious-activity reporting. Employees need customer information, time and training to investigate the payments moving through the bank.

Staffing and training are decisions about how much scrutiny the business can support. Customer documentation supplies the context for that scrutiny. An employee reviewing transactions needs both the information and the capacity to use it. The later criminal agreement’s admissions reached both sides of that problem.

The Federal Reserve’s civil penalty order covered the bank and its New York and Chicago branches. FinCEN’s $30,000,000 assessment ran concurrently with the Federal Reserve assessment. The civil action addressed the bank’s own controls and reporting, the work needed to understand the transactions it processed.

What Are Examples of Sanctions Evasion?

Payment-message stripping is one example of sanctions evasion: removing identifying information deprives the screening bank of information it needs to recognize a restricted connection. Under its deferred prosecution agreement, ABN AMRO admitted to payment stripping alongside failures in its New York controls.

A separate Standard Chartered case shows how that practice worked. The New York Department of Financial Services’ September 2012 consent order described removal or omission of identifiers through cover payments and an internal practice called repair. Its April 2019 order recorded the bank’s earlier admission of intentional stripping to conceal Iranian connections.

A screening process depends on the information reaching it. When identifying information disappears upstream, the next bank sees a different account of the transaction. The payment can keep moving while the reason to question it has been removed.

For an insider, the original message and the version sent onward can explain what changed. Instructions, approvals and the response to a correspondent’s questions can explain who wanted that change and why. We look at those differences with the person who understands how the payment desk worked.

What the Criminal Agreement Admitted

Under the 2010 deferred prosecution agreement, the former ABN AMRO bank accepted responsibility for inadequate staffing, training, oversight and customer documentation at its New York branch. The criminal charging document alleged a Bank Secrecy Act violation and a conspiracy to defraud the United States and violate sanctions laws.

The staffing decision and the payment decision leave different evidence. A manager may know what resources the clearing operation received. A customer-onboarding employee may know what the bank learned about a relationship. Payment operations may see what information went into a message and what came out. Together, those perspectives can connect the bank’s knowledge to the way it conducted the business.

What a Dollar-Clearing Insider May Hold

Compliance officers, investigators, auditors, onboarding staff and operations employees see different parts of a bank’s payment and control systems in their ordinary work.

Staffing approvals and training records explain the capacity assigned to the clearing business. Customer files and correspondent questionnaires show what the bank understood about a relationship. Original and transmitted payment messages show what information survived the transfer. Audit findings, management escalations and approval records can connect a known weakness to the decision about what happened next.

We work with insiders to connect those pieces: what the business knew about the customer, what it told the next bank, and who controlled the response when those accounts diverged.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. The Bank Secrecy Act and sanctions whistleblower program can pay qualifying whistleblowers 10% to 30% of eligible penalties collected in an action imposing more than $1 million in penalties. We assess that route with you against the conduct and evidence you know.

You Know What the Payment Left Out

If you know who approved stripped messages or left a clearing operation without the staff and customer information it needed, speak to our whistleblower experts. We build your strongest banking whistleblower case around what you know, bring in banking and sanctions whistleblower lawyers who understand dollar clearing, and stay beside you through the case.