Dutch Regulator AFM Cracks Down on Money Laundering: What Dutch Businesses Need to Know
The Netherlands, with its 17th largest economy in the world, is an attractive destination for international companies, including fintech service providers. However, the country’s financial landscape has also drawn the attention of money launderers and other financial criminals. In response, the Dutch government has implemented rigorous anti-money laundering (AML) and counter-terrorist financing (CFT) regulations. In this article, we’ll discuss the role of the Dutch Authority for the Financial Markets (AFM) in enforcing these regulations and what Dutch businesses need to know to comply.
The Authority for the Financial Markets (AFM)
The Netherlands’ primary financial regulator is the AFM, which was established in 2002 to regulate and supervise Dutch financial entities and ensure they adhere to AML regulations. The AFM operates under the control of the Dutch Minister of Finance and covers various aspects of the financial sector, including savings and loans, capital markets, and asset management. Penalties for non-compliance include warnings, reporting offenses to law enforcement agencies, and imposing fines and penalty payments.
AFM and Dutch Central Bank (DNB)
Working in collaboration with the Dutch Central Bank (DNB), the AFM plays a crucial role in licensing financial institutions operating in the Netherlands. Companies must meet specific requirements and complete a lengthy application process to obtain a license.
Anti-Money Laundering Compliance in the Netherlands
Dutch financial institutions rely on the Anti-Money Laundering and Anti-Terrorist Financing Act (Wet ter voorkoming van witwassen en financieren van terrorisme – Wwft) to prevent money laundering and terrorist financing. The law’s requirements include:
- Conducting a risk-based approach to AML
- Customer due diligence (CDD)
- Identity verification
- Beneficial ownership verification
- Transaction screening
- Adverse media checks
Customer Due Diligence (CDD)
CDD involves collecting essential information, such as names, addresses, dates of birth, and official company documentation, to assess the risk each customer represents. Companies must also verify the identities of beneficial owners to prevent their use of corporate infrastructure or shell companies for financial crimes.
European Union Regulations
EU member states, including the Netherlands, must adhere to anti-money laundering directives (AMLD) released by the European Parliament. The latest directive, the Sixth Anti-Money Laundering Directive (6AMLD), took effect in June 2021 and introduced several updates, such as:
- A harmonized list of 22 predicate offenses for money laundering
- A broader criminal scope for money laundering
- Increased criminal penalties
- New dual criminality rules
- Extended criminal liability for legal persons
Regulatory Updates and Guidance
The AFM and DNB provide guidance and updates to help businesses navigate the ever-evolving AML landscape. Recent actions include:
- The AFM imposed a €150,000 compliance penalty on Revo Capital Management for Wwft infringements.
- The DNB issued guidance for dealing with Ukraine sanctions following Russia’s invasion in February 2022.
- Both regulatory bodies have published recommendations for fintech products and services, such as cryptocurrencies and cryptocurrency service providers.
Summary
By remaining informed of the most recent regulatory developments and implementing robust AML compliance measures, businesses in the Netherlands can effectively mitigate the risk of money laundering and maintain their reputations in the global financial market.