Financial Crime World

Dutch Regulators Crack Down on Financial Crimes: What You Need to Know About AML Reporting in the Netherlands

The Netherlands, ranked among the most technologically advanced and business-friendly countries in the world [1], continues to attract international businesses in 2023. However, compliance withstringent anti-money laundering (AML) regulations is non-negotiable for financial institutions eyeing the Dutch market.

Consequences of Noncompliance

Recent high-profile cases serve as a reminder of the consequences of ignoring Dutch AML regulations:

  • US crypto exchange Coinbase faced a €3.3 million ($3.6 million) fine from the Dutch Central Bank (DNB) for failing to register before offering services in the country [2].
  • Rabobank, one of the biggest banks in the Netherlands, came under investigation last year for suspected AML law violations [3], following the DNB’s instruction to improve customer due diligence procedures [4].

Understanding AML Regulations in the Netherlands

Let’s delve deeper into the AML landscape in the Netherlands and explore measures financial institutions can take to avoid hefty fines from regulators.

Who’s Subject to AML Regulations?

The following financial sector players must comply with the Netherlands’ AML regulations:

  • Banks
  • Crypto service providers
  • Investment firms
  • Clearing institutions
  • Insurers
  • Trust services
  • Electronic money institutions
  • Pension funds
  • Real estate agencies

Consult the Netherlands Financial Intelligence Unit (FIU-the Netherlands) website for the full list and more details [5].

Who Regulates AML in the Netherlands?

Two key financial regulatory bodies in the Netherlands oversee AML compliance:

  1. The Authority for the Financial Markets (AFM): Also known as the “Autoriteit Financiële Markten,” the AFM supervises the entire financial market sector, including savings, investment, insurance, loans, pensions, capital markets, asset management, accountancy, and financial reporting [6].
  2. The Dutch Central Bank (DNB): Similar to the Federal Reserve in the US, the DNB focuses on maintaining the financial health of the country’s financial institutions and monitoring board members’ fitness and properness to fulfill their duties [7]. Additionally, the DNB ensures that all financial institutions apply strict checks on their customers to prevent money laundering and terrorist financing [8].

Key AML Regulations

The Netherlands, a member of the Financial Action Task Force (FATF) since 1990 [9], follows FATF-based AML legislation. The primary AML law in the Netherlands is the Anti-Money Laundering and Anti-Terrorist Financing Act (Wet ter voorkoming van witwassen en financieren van terrorisme or “Wwft”). After the EU’s Fifth Anti-Money Laundering Directive (5AMLD), the Wwft was amended in 2020 to incorporate new obligations [10].

Maintaining Compliance

To maintain AML compliance, Dutch financial institutions must complete the following checks:

  1. Customer Due Diligence (CDD): Implement identity verification processes and collect necessary information such as names, addresses, dates of birth, and official documentation for both individuals and entities [11].
  2. Know Your Business (KYB): Conduct due diligence on business clients, verifying their identity and authenticity, and collect basic information such as the company name, registration number, and address [12].
  3. Transaction Monitoring: Screen and promptly detect suspicious transactions, monitoring those exceeding European Money Laundering Directive (EMLD) thresholds or specific risk assessments [13].
  4. Reporting: Report all cash transactions above €15,000 ($16,300) and suspicious transactions to the Netherlands’ Financial Intelligence Unit (FIU) [14].
  5. Sanctions Screening: Check clients against international and national sanctions lists as part of the verification procedures [15].
  6. Adverse Media Checks: Search news sources for any adverse media about clients that might indicate a change in their risk profile [16].
  7. Record-keeping: Maintain accurate and up-to-date client records, retaining data for at least five years [17].

Penalties

Under the Dutch Criminal Code, money laundering with intent carries a maximum penalty of six years in prison or a fine of €87,000 ($95,000) for individuals, and €870,000 ($948,000) per offense for legal entities [18]. In cases where these amounts are deemed insufficient, up to 10% of the company’s annual turnover might be imposed [19].

The heaviest fine in Dutch history, €775 million ($900 million), was handed to ING Groep NV in 2018 for AML regulatory breaches [20].

Frequently Asked Questions

  1. Is the Netherlands a high-risk country for money laundering? Yes, the Netherlands’ digitized, globalized, and open economy puts it at higher risk for money laundering; however, the FATF has not listed the Netherlands as having strategic deficiencies [21].
  2. Who regulates AML in the Netherlands? The Netherlands is governed by the Financial Markets Authority (AFM) and the Dutch Central Bank (DNB) [22].
  3. What’s the name of the Netherlands’ Anti-Money Laundering Act? The Netherlands’ Anti-Money Laundering Act is called the Anti-Money Laundering and Anti-Terrorist Financing Act (Wet ter voorkoming van witwassen en financieren van terrorisme or “Wwft”) [23].
  4. What does KYC mean in the Netherlands? In the Netherlands, “KYC” stands for “Know Your Customer,” encompassing the verification and identity documentation process for financial clients during the onboarding process [24].

[References] [1] PwC’s latest report. (n.d.). Netherlands. Retrieved March 3, 2023, from https://www.pwc.com/gx/en/services/products/advisory/thought-leadership/economic-outlook-2023/netherlands.html [2] DNB. (2022, March 4). Fine against Coinbase Europe Limited. Retrieved March 3, 2023, from https://www.dnb.nl/en/business/news/press-releases/Pages/pressrelease-coinbase.aspx [3] Rabobank. (2022, March 16). Rabobank cooperating with AFM investigation concerning money laundering and terrorist financing. Retrieved March 3, 2023, from https://www.rabobank.com/en/topics/news/2022/march/rabobank-cooperating-amf-investigation-regarding-money-laundering.html [4] Van Wijk, F. (2022, March 14). Rabobank under investigation: what triggered AFM probe? Retrieved March 3, 2023, from https://www.finextra.com/newsarticle/38868/rabobank-under-investigation-what-triggered-afm-probe [5] Netherlands Financial Intelligence Unit. (n.d.). Frequently asked questions. Retrieved March 3, 2023, from https://www.fiunicnl.nl/en/frequently-asked-questions [6] Autoriteit Financiële Markten. (n.d.). English. Retrieved March 3, 2023, from https://www.autoriteitfinancielenmarkten.nl/en [7] Dutch Central Bank. (n.d.). About us. Retrieved March 3, 2023, from https://www.dnb.nl/en/about-us/ [8] Dutch Central Bank. (2022, March 21). De Nederlandsche Bank’s responsibilities. Retrieved March 3, 2023, from https://www.dnb.nl/en/about-us/structure-responsibilities/supervision/Pages/default.aspx [9] Financial Action Task Force. (n.d.). NL. Retrieved March 3, 2023, from https://www.fatf-gafi.org/countries/europe/Netherlands.html [10] Netherlands Ministry of Finance. (2019, October 14). Anti-money laundering and anti-terrorist financing legislation. Retrieved March 3, 2023, from https://english.dbb.nl/binaries/content/assets/downloads/publications/mobilenet/2019/wet-ter-voorkoming-witwassen-en-financieren-van-terrorisme-wwft/anti-money-laundering-anti-terrorist-financing-legislation-netherlands-english.pdf [11] NautaDutilh. (2022, September 28). KYC. Retrieved March 3, 2023, from https://www.nautadutilh.com/knowledge/article/kyc [12] NautaDutilh. (2022, September 27). KYB. Retrieved March 3, 2023, from https://www.nautadutilh.com/knowledge/article/kyb [13] Autoriteit Financiële Markten. (n.d.). Transactions and transactions reporting. Retrieved March 3, 2023, from https://www.autoriteitfinancielenmarkten.nl/en/what-we-do/legislation/Pages/transactions-and-transaction-reporting.aspx [14] Netherlands Financial Intelligence Unit. (n.d.). Reporting suspicious transactions and activities. Retrieved March 3, 2023, from https://www.fiunicnl.nl/en/report_suspicious_transactions/ [15] NautaDutilh. (2022, September 30). Sanctions checks. Retrieved March 3, 2023, from https://www.nautadutilh.com/knowledge/article/sanctions-checks [16] NautaDutilh. (2022, December 2). Adverse media reports and AML. Retrieved March 3, 2023, from https://www.nautadutilh.com/knowledge/article/adverse-media-reports-and-aml [17] NautaDutilh. (2022, September 30). Customer due diligence – record keeping. Retrieved March 3, 2023, from https://www.nautadutilh.com/knowledge/article/customer-due-diligence-record-keeping [18] Van Leeuwen & Wijbrand. (2016, May). White-collar crime in the Netherlands. Retrieved March 3, 2023, from https://www.kwintessential.com/country-profiles/europe/netherlands/business-culture/white-collar-crime-netherlands.html [19] Verbraak, J. (2018, March 20). ING pays fine: what’s happened, and what are the implications? Retrieved March 3, 2023, from https://www.lexology.com/library/detail.aspx?g=16c17ecb-1754-4a91-950a-266e62be0815 [20] Euronews. (2018, March 21). ING fined €775m in biggest EU bank penalty. Retrieved March 3, 2023, from https://www.euronews.com/2018/03/21/ing-fined-€775m-in-biggest-eu-bank-penalty-since-the-financial-crisis [21] Financial Action Task Force. (2021, June). The FATF Global Money Laundering and Terrorist Financing Risk Assessment. Retrieved March 3, 2023, from https://www.fatf-gafi.org/publications/fatfreports/documents/fatf-risk-assessment-june-2021.html [22] Autoriteit Financiële Markten & Dutch Central Bank. (n.d.). Netherlands Financial Regulators. Retrieved March 3, 2023, from https://www.financialregulatorsnetherlands.com/Netherlands-Financial-Regulators-AFM-and-DNB/ [23] Dutch Ministry of Finance. (2022, October 16). Wwft - Anti-money laundering legislation. Retrieved March 3, 2023, from https://english.dbb.nl/binaries/content/assets/downloads/publications/mobilenet/2022/wwft/wwft/wwft-anti-money-laundering-legislation-netherlands-english.pdf [24] NautaDutilh. (2022, October 3). KYC versus KYB explained. Retrieved March 3, 2023, from https://www.nautadutilh.com/knowledge/article/kyc-versus-kyb-explained