Dutch Financial Institutions Braced for Stricter AML/CFT Compliance: An Overview of the Legal Framework in the Netherlands

Financial integrity is a crucial component of a robust financial system. Dutch financial institutions are committed to preventing the use of their facilities for money laundering and terrorist financing activities. The Dutch Central Bank (DNB) plays a significant role in ensuring that financial institutions comply with local and international laws. In this article, we provide an overview of the Dutch regulatory framework, focusing on key statutes, policy statements, and international organizations.

Legislation and Policy Statements

European Directives

The European Union’s (EU) Anti-Money Laundering Directives (AMLD) mandate preventing money laundering and terrorism financing through the financial system. The Dutch government has transposed these directives into national law, creating a comprehensive regulatory framework.

Financial Supervision Act (Wet Financieel Toezicht – Wft)

The Financial Supervision Act (Wft) encompasses both prudential rules and provisions aimed at ethical business practices. While Wft provisions are not explicit in combating money laundering and terrorist financing, they focus on preventing unethical behavior.

Anti-Money Laundering and Anti-Terrorist Financing Act (Wet ter voorkoming van witwassen en financieren van terrorisme – Wwft)

The Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft) is the Dutch law tailored to combat money laundering and terrorist financing. It implements the EU AMLD and international standards from the Financial Action Task Force (FATF).

Sanctions Act (Sanctiewet 1977)

The Sanctions Act formalizes the Dutch sanctions system by implementing (inter)national rules on international sanctions. Financial institutions must adhere to sanctions lists to ensure they do not maintain relationships with sanctioned individuals or entities.

Act on the Supervision of Trust Offices 2018 (Wet toezicht trustkantoren – Wtt)

The Act on the Supervision of Trust Offices (Wtt) regulates the trust sector’s operation management and internal controls, with a view to preserving the financial system’s integrity.

Our Policy Statements

The DNB issues various policy statements to ensure institutions under its supervision maintain appropriate integrity measures. These policy statements include supervisory regulations and policy rules.

European and International Organizations

European Banking Authority (EBA)

The European Banking Authority (EBA) was established in 2011 with the role of enhancing the prudential regulation and supervision of the EU banking sector. Its role expanded in 2019 to include protecting the financial system against money laundering and terrorist financing.

Financial Action Task Force (FATF)

The Financial Action Task Force (FATF) is an inter-governmental body initiated by the G7 in 1989. Its primary objective is to combat money laundering and terrorist financing internationally. As a member country, the Netherlands must adhere to its standards. The FATF conducts periodic evaluations of its member countries’ effectiveness in countering money laundering and terrorist financing.

Stay tuned for more in-depth analysis of each section, offering valuable insights into the Dutch regulatory framework and its role in protecting the financial system.