DNB Imposes EUR $100,000 Penalty on Erez Corporate Service for Unremedied AML Failures

Key Takeaways

• De Nederlandsche Bank (DNB) has required trust company Erez Corporate Service BV to pay a EUR $100,000 penalty because it failed to cure serious violations of the Trust Offices Supervision Act 2018 within the six-month period set by an April 2024 Penalty Payment Order.
• The case shows that regulators will follow up on remediation deadlines and escalate when firms do not fix deficiencies in risk assessments, procedures, and client due diligence.
• The decision is now irrevocable because Erez withdrew its appeal.

Deep Dive

De Nederlandsche Bank (DNB) has required trust company Erez Corporate Service BV to pay a EUR $100,000 penalty because it failed to cure serious violations of the Trust Offices Supervision Act 2018 within the six-month period set by an April 2024 Penalty Payment Order. The case shows that regulators will follow up on remediation deadlines and escalate when firms do not fix deficiencies in risk assessments, procedures, and client due diligence. The decision is now irrevocable because Erez withdrew its appeal.

DNB found three main failings. First, Erez's Systematic Integrity Risk Analysis (SIRA) was not tailored to its services and client portfolio, so some integrity risks went unrecognized and identified risks were not mitigated by policies, procedures, and measures. Second, its procedural manual lacked adequate procedures, including for transaction monitoring and for assigning risk classifications to client files. Third, client due diligence was insufficient in every file DNB reviewed. The gaps covered the assessment of integrity risks tied to the services, the legitimate origin of the target company's assets, identification of the ultimate beneficial owner (UBO), and understanding the nature of the structure. DNB treated these as serious because they exposed Erez's services to misuse for money laundering, terrorist financing, and tax evasion. It also noted the deficiencies had persisted for a long period.

The key dates are:
- 25 April 2024: Penalty Payment Order issued, with a six-month cure period.
- Late October 2024: cure period expired. DNB's subsequent investigation confirmed non-compliance.
- Objection and appeal: each carries a six-week window. Erez withdrew its appeal, making the decision irrevocable.
- 17 September 2026: public release of the decision and the objection decision.

The gap of more than two years between the original order and publication shows how long enforcement can take. Firms should expect reputational exposure well after the underlying conduct.

Compliance professionals, especially at trust offices and other gatekeepers, should:
- Test whether the SIRA reflects actual services, client types, geographies, and structures, rather than generic templates.
- Check that procedural manuals set out operational detail on transaction monitoring and client risk classification, and that staff apply them.
- Run file reviews on a sample of client files, focusing on source of assets, UBO verification, and structure rationale.
- Track remediation deadlines under any regulatory order with named owners, interim milestones, and independent validation before the deadline.
- Escalate to senior management and the board early if remediation is at risk.

The penalty is modest in size, but the consequences go further: public naming, an ongoing obligation to remediate, and the possibility of heavier measures such as fines, directions, or licensing action if non-compliance continues. Findings that every reviewed file was deficient suggest systemic control failures, which regulators treat as more serious than isolated errors. Firms with similar weaknesses in risk assessment or due diligence face comparable supervisory attention.

Source: De Nederlandsche Bank