US authorities said ING moved $1.6bn illegally through banks in the US from the early 1990s through 2007 by concealing the nature of the transactions.
ING eliminated payment data that would have revealed the involvement of sanctioned countries and entities, authorities have said.
The bank also told clients how to evade computer filters designed to prevent sanctioned entities from gaining access to the US banking system. And it provided US finance services to sanctioned entities through shell companies and misuse of an internal ING account.
Amsterdam-based ING said in a statement its banking unit took a provision in the first quarter to cover the penalty, and that it had taken steps to improve its compliance. It closed its representative office in Cuba in 2007 and terminated relationships with sanctioned banks.
ING is the fourth major bank to settle with New York and US authorities over “stripping” wire transfer information to hide the illegal movement of money through banks in New York on behalf of clients subject to US sanctions.
Credit Suisse agreed to pay $536m in 2009 to settle charges of illegal transactions involving Iran, Cuba and Libya, and elsewhere. Lloyds TSB agreed to forfeit $350m that year to settle charges it altered records for clients from Iran, Sudan and other sanctioned countries.
Barclays settled similar charges in 2010 for $298m.