Whistleblowing complaints at the European Investment Bank have revealed a disregard for anti-money laundering rules when providing billions of euros to projects around the world, according to a trove of internal documents and emails seen by the Luxembourg Times.
The EU bank has called for an inquiry into a pattern of wrongdoing, misconduct and obstruction, alleged in the whistleblowing complaints made last summer.
Group chief compliance officer Gerhard Hütz, a 20-year EIB veteran who oversaw the bank’s beleaguered compliance unit for seven years, left office just a few months after the complaints and a damning audit report.
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” or KYC checks. 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, according to one of the documents.
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. Hütz’s departure and his appointment into a new role were in line with the bank’s policy on internal mobility, a spokesperson for the EIB said.
Banks typically collect information on clients before signing off on deals to ensure that loans will be used for their stated purpose, and not to finance illegal activities such as drug trafficking, prostitution or terrorism. The Luxembourg-based EIB’s activities extend into several countries where regulatory standards are lower than in the EU.
It has invested €1.2 trillion in start-ups and larger companies in 162 countries from Fiji, Pakistan, Gabon to Argentina since it was set up 62 years ago. The bank raises its funds on capital markets – mainly by issuing bonds – and has financed 12,716 projects in telecoms, transport, waste, energy and infrastructure through loans and equity.