(Recasts with details, shares fall)
AMSTERDAM, Sept 26 (Reuters) - Prosecutors are investigating alleged money laundering at ABN Amro, one of the largest banks in the Netherlands, saying on Thursday they suspected the lender had failed to do due diligence on its clients for years.
The move against ABN Amro is part of a push by prosecutors to crack down on years of lax monitoring of illegal transactions via Dutch bank accounts.
ABN Amro shares tumbled more than 9% at market open in Amsterdam.
The bank was notified of the investigation on Wednesday but was not given further details on the scale of inquiry, said ABN spokesman Jeroen van Maarschalkerweerd.
"We have stated clearly over the past few years that we also felt we had to improve," he said.
"This is a top priority for us, we have always known we had to do things better, but we have also always been clear that an investigation such as this might occur."
Prosecutors said they believe that ABN Amro reported suspicious transactions too late or not at all over a lengthy period, adding that the bank failed to conduct proper investigation of client behaviour and did not sever ties with suspect clients in a timely fashion.
They did not disclose over what period the alleged failures occurred.
"We have no indication of the possible impact of this investigation," van Maarschalkerweerd said.
Dutch bank ING was fined a record $900 million in September last year for failing to spot criminal activities financed through its accounts, including bribery payments to foreign officials.
In the months following ING's fine, ABN said it had increased anti-money laundering operations at a cost of nearly 200 million euros, with a dedicated staff of more than 1,000.
ABN Amro had warned in August that it faced possible money laundering fines after the Dutch central bank ordered it to review all retail clients in the Netherlands for possible money laundering or other criminal activities. (Reporting by Bart Meijer; Editing by David Goodman, Anthony Deutsch and Deepa Babington)