The European Investment Bank (EIB) has come under scrutiny after whistleblowing complaints have surfaced revealing a disregard for anti-money laundering rules when providing billions of euros to projects around the world. The EU bank has called for an inquiry into a pattern of wrongdoing, misconduct and obstruction, alleged in the whistleblowing complaints made last summer.
EU finance ministers, who make up the board of governors – the bank’s highest decision-making body – were aware of failures to conduct proper “know your customer” checks. Internal documents seen by Luxembourg Times suggest that several ministers at a board meeting in June 2019 said it was an immediate and urgent priority to “remove gaps” in anti-money laundering and counter-terrorism financing (AML/CFT) practices.
Banks typically collect information on clients before signing off on deals to ensure that loans are for their stated purpose, and not to finance illegal activities. The bank confirmed that the audit report had identified gaps, partly related to an “incomplete adaptation” of the bank’s policies in line with the latest AML/CFT regulations.
The bank only adopted AML/CFT procedures three years ago, a draft audit report published in May last year said. A few months later, it made it mandatory for clients to provide documentation, so that it could carry out due diligence at any time during the business relationship, an internal presentation showed.
The whistleblowing allegations that the Group chief compliance officer – Gerhard Hütz – overlooked compliance gaps led the bank to hire PricewaterhouseCoopers for a “fact-finding exercise”. The consulting firm is currently investigating the claims that Hütz signed off on the legacy project, which was then approved by the bank’s nine-strong management committee despite Hütz’s team pointing out “huge gaps”.
Date: 24 April 2020
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