Financial Crime World

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Dutch Financial Institutions Required to Register as Anti-Money Laundering Institution

Amsterdam, NL - In a move aimed at strengthening the country’s anti-money laundering (AML) efforts, the Dutch government has announced that financial institutions offering professional exchange services for cryptocurrencies and those providing digital wallets must register with the De Nederlandsche Bank (DNB), the Netherlands’ central bank.

What is Considered an Institution Under the AML CTF Act?

According to Section 1a of the AML CTF Act, any natural person or legal entity that professionally exchanges virtual currencies (such as Bitcoin) for fiat currency or offers digital wallets is considered an institution under the act. This means they must adhere to strict anti-money laundering regulations and reporting requirements.

Compliance with Regulations

The DNB has been tasked with overseeing compliance with these regulations, which include:

  • Establishing risk assessments
  • Implementing customer due diligence procedures
  • Training employees on AML protocols

NFTs Under Scrutiny

The AML CTF Act also extends to non-fungible tokens (NFTs), a relatively new phenomenon in the digital art world. While there is no explicit mention of NFTs in the act, experts believe that those who buy and sell NFTs for an amount exceeding €10,000 may be subject to AML regulations.

Compliance Programs Required

Financial institutions with two or more policy makers must:

  • Appoint a day-to-day anti-money laundering compliance officer responsible for ensuring adherence to the act’s requirements
  • Establish risk assessments
  • Implement customer due diligence procedures
  • Train employees on AML protocols

Recordkeeping and Reporting Requirements

Institutions subject to the AML CTF Act are required to:

  • Maintain detailed records of all transactions, including cash exchanges and money transfers exceeding €10,000
  • File reports of unusual transactions with the Financial Intelligence Unit (FIU) within a specified timeframe

Cross-Border Transactions

The act applies to cross-border transactions, requiring financial institutions to report any unusual transactions involving transactions to and from the Netherlands.

Customer Identification and Due Diligence Requirements

Financial institutions are required to implement three levels of customer identification and due diligence:

  • Simplified
  • Standard
  • Enhanced

The level of due diligence depends on the risk associated with the client or transaction.

Shell Banks Prohibited

The act prohibits financial institutions from entering into correspondent relations with shell banks or those that allow such banks to use their accounts.

Reporting Suspicious Activity

Financial institutions are required to report any unusual transactions, which may include transactions exceeding certain thresholds or exhibiting other suspicious activity. The FIU will determine whether a reported transaction is actually suspicious.

Information Sharing Mechanisms

Efforts to facilitate information sharing between financial institutions, government authorities, and businesses subject to anti-money laundering controls are underway. The Dutch government has announced plans to enhance public-private information exchange mechanisms to assist with identifying and reporting suspicious activity.

Note: Confidentiality regarding notifications and exempting financial institutions from liability for damages caused by reporting unusual transactions in good faith is maintained.