Financial Crime World

Money Laundering Crackdown: AFM Imposes Strict Rules on Financial Service Providers in the Netherlands Antilles

Amid growing concerns over financial-economic crime and unethical practices, the Dutch Autoriteit Financiële Markten (AFM) is tightening the regulatory framework for financial service providers on the BES islands of Bonaire, Sint Eustatius, and Saba. This crackdown, facilitated through the Money Laundering and Terrorism Financing (BES Islands) Act, aims to prevent the flow of illegally-gained funds and financing of terrorism.

Responsibilities of Service Providers

Integral to the financial landscape, these service providers play a crucial role in enforcing anti-money laundering (AML) and countering the financing of terrorism (CFT) measures. To fulfill these obligations under the Wwft BES regulations, service providers must adhere to the following provisions:

  1. Prevent money laundering: Ensure that funds derived from criminal offenses are not laundered.
  2. Block the financing of terrorism: Prevent the financial system from being used for terrorism financing.
  3. Sanctioned individuals and entities: Prevent access to the financial sector by sanctioned parties.
  4. Business relations: Shun businesses and individuals linked to corruption and fraud.

Which Service Providers Fall Under AFM Wwft BES Supervision?

The AFM oversees the following types of service providers on the BES islands:

  • Life insurance intermediaries
  • Investment companies
  • Service providers offering investment services

Client Due Diligence: Know Your Client

For life insurance intermediaries, a thorough due diligence process is essential, focusing on assessing the clients’ identity and suitability. The process involves examining clients:

  • With annual premiums over $1,400
  • Or lump sum premiums exceeding $2,800

Lower-risk individuals may not undergo a comprehensive review, but all clients are subject to scrutiny if linked to money laundering or terrorism financing.

Unusual Transactions Reporting Obligation

Service providers must report unusual transactions to the Financial Intelligence Unit Netherlands (FIU-Nederland). Awareness towards potential money laundering and terrorist financing activities is crucial. Indicators of such activities:

  • Are not limited to account transactions, transfers, or transactions
  • Must not be consistent with a client’s business, profile, or typical activities

Sanctioned Individuals, Entities, and Nations

Respecting the Sanctions Act (Sanctiewet 1977), service providers must screen all individuals and entities associated with their financial services or transactions, using the provided sanction lists in the Guideline. Report any matching descriptions to De Nederlandsche Bank immediately.

Further Guidance for Service Providers

In addition to the AFM’s guideline and the Wwft BES Regulation, the following international resources offer further explanations on requirements for BES islands service providers:

  1. Guidance document on the Wwft BES for service providers (English version)
  2. FATF guidelines for the Life Insurance and Securities sectors on adopting a risk-based approach
  3. FATF statement on High-Risk and Other Monitored Jurisdictions