The Dutch Central Bank (DNB) should not have banned online bank Bunq from screening customers using artificial intelligence and data analysis. The court will decide that in the appeals process. This means that Bunq can continue to check in this way.

According to the Money Laundering Act, banks must prevent money laundering and terrorist financing by classifying their customers according to risk profiles and monitoring them accordingly. According to Bunq, one of the best ways to do this is with artificial intelligence, but DNB didn’t agree with that. So he instructed the bank to do things differently. Bunq then went to court.

Bunq was founded in 2012 and operates entirely online. So there are no physical branches: all banking is done via an app.

The Trade and Industry Appeals Tribunal now decides on appeal that the DNB has not sufficiently demonstrated that this method of verification violates the Money Laundering Act. The judge also disagreed with DNB’s decision that Bunq did not collect enough information from business customers.

However, it remains that Bunq violated some of the anti-money laundering rules. For example, the bank did not do enough research into the activities with which its customers earn their money. The bank also did not take a close enough look at customers with important public functions.

settlements of hundreds of millions

In recent years, several major settlements have been reached with other banks for failing to properly screen and monitor their customers. In 2018, the public prosecutor’s office reached a settlement of 775 million euros with ING.

ABN Amro followed in 2021 with a settlement of 480 million euros. Directors of both banks were also personally prosecuted. Last week it was revealed that a new criminal investigation into an ING subsidiary is underway.

More staff

The judgment of the supreme court can also have consequences for other banks. They’ve hired a lot of staff to screen customers in recent years, with around 13,000 bank employees involved, according to the Dutch Banking Association. That is about 15 percent of the total and costs the banking sector 1.4 billion euros per year. Some of the costs are passed on to the customer by the banks.

DNB also wrote in a report last month that customer audits should be “more risk-based”. According to the regulator, artificial intelligence is still an option to decide how risky a customer’s profile is. According to the DNB, one condition is that data use is secure and discrimination must be prevented.