The defence industry is complex. Local, national and international authorities all recognise the importance of law enforcement. Police carry weapons in communities, and soldiers carry weapons in armies and during peacekeeping missions for international bodies such as the United Nations.
These weapons are made by companies that need financial services, just like any other company. Still, certain weapons are more controversial than others, and defence equipment has been known to contribute to great suffering.
We seek to balance the need for defence equipment with the desire to not harm civilians. We don’t fund controversial weapons and extensively screen companies requesting funding for this industry.
In all cases we expect our customers to comply with laws and international agreements governing the sector. For example, in the case of trade financing (transport) where weapons might be involved, clients must show proof that there’s a valid export license. We check the origin and destination of such transport.
Also known as cluster bombs, these are explosive weapons that release sub-munitions. They are controversial, as using them harbours a high chance of civilian casualties.
ING does not finance the production of cluster munition, nor do we finance the trading, buying or selling of cluster munition. We don’t provide any services whatsoever to companies that produce cluster munition.
ING does not finance the development, production, maintenance or trade of nuclear weapons. Certain companies are partially involved in producing nuclear weapons while primarily engaged in non-defence activities. In those cases, ING doesn’t finance the nuclear weapons activities of these companies. It’s possible that we finance other activities of these companies, such as the production of lifts, thermostats or aircrafts for the civilian sector.
We only finance these other activities when these companies are headquartered in a country whose government has signed the so-called ‘non-proliferation treaty’. This treaty’s objective is to prevent the proliferation of nuclear weapons and weapons technology; to promote cooperation on the peaceful uses of nuclear energy; and to further the goal of achieving nuclear disarmament and general and complete disarmament. We balance our resolve to not be involved in nuclear weapons with our role as a financier and investor in the economy.
There are other controversial weapons, including anti-personnel mines, depleted uranium munition, biological (bacterial) weapons and chemical weapons. The use of these weapons harbours a great chance of civilian casualties.
ING does not finance the production of these weapons. Nor do we finance the trading, buying or selling of these weapons. We don’t provide any services whatsoever to companies that produce these weapons.
In some cases we are asked to finance goods that can be used for either military or civilian purposes. These ‘dual-use goods’ must comply with our defence policy when used for defence-related activities.
As part of screening our engagements with clients in the defence industry, we must ascertain if goods do indeed have a dual purpose.
We do this by following the ‘Wassenaar Arrangement’ on export controls for military goods, including dual-use goods. Participating countries seek to ensure that transfers of military-used goods don’t contribute to the development or enhancement of military capabilities that undermine those goals. The aim is also to prevent terrorists from acquiring military goods.
Whenever ING is requested to finance a transaction involving dual-use goods, we cross-check the goods against this Wassenaar Arrangement as well as against relevant lists of dual-use goods as issued in the US in order to check their potential military purpose. We screen extensively to ensure the purpose of such financing is strictly civilian.
ING entities have effective controls in place within transaction due diligence to manage risks related to export trade controls and proliferation financing. ING prohibits proliferation financing, defined as: “The act of providing funds or financial services that are used in any way to support trade in or the use of nuclear, chemical or biological weapons, in contravention of national laws or, where applicable, international obligations. The associated controls extend to dual-use goods.”
In order to avoid financing transactions of military goods involving countries that are sensitive to corruption, we have thorough due diligence processes in place before we consider providing other financial services as well.
For example, we have an extensive country and territory risk list in place, which categorises countries into low, medium, high to ultra-high-risk. This list contains some 250 countries and territories and is used during on-boarding of customers as well as during ING’s ongoing ‘know your client’ process.
The combination of ongoing ‘know your client’ and transaction due diligence established a robust control framework to mitigate the risk of doing business with certain parties that are considered to have a high(er) inherent level of corruption due to e.g. geography or political instability. More information is available in our FEC statement & Wolfsberg questionnaire as well as ING’s Annual report.