Financial Crime World

Dutch Regulators Crack Down on Financial Crimes: AML Regulations and Penalties in the Netherlands

The Netherlands, with its advanced technology and thriving business climate, continues to attract international companies in 2023 [1]. However, entering the Dutch market comes with strict anti-money laundering (AML) regulations. Two recent high-profile cases involving US crypto exchange Coinbase and Rabobank serve as stark reminders of the importance of complying with local regulations [2][3].

Consequences of Non-Compliance

Companies ignoring AML regulations risk costly fines and even imprisonment. Two of the most prominent financial regulators in the Netherlands are the Autoriteit Financiële Markten (AFM) and the Dutch Central Bank (DNB).

Coinbase Fine

[Coinbase], a leading US crypto exchange, was fined €3.3 million ($3.6 million) by the Dutch Central Bank (DNB) for failing to register in the Netherlands before offering services [2].

Rabobank Investigation

Last year, Rabobank, one of the biggest banks in the Netherlands, was investigated for suspected violations of the country’s AML law [3]. This followed a 2021 instruction by the DNB for the bank to address customer due diligence procedures.

Who’s Affected?

Institutions subject to AML regulations in the Netherlands include:

  • Banks
  • Crypto service providers
  • Investment firms
  • Clearing institutions
  • Insurers
  • Trust services
  • Electronic money institutions
  • Pension funds
  • Real estate agencies [4]

Dutch Regulators and their Roles

The Netherlands has two key financial regulators:

Autoriteit Financiële Markten (AFM)

The Autoriteit Financiële Markten (AFM), also known as the Authority for the Financial Markets, is responsible for supervising the entire financial market sector [5]. They conduct inspections, enforce regulations, and collaborate with the Dutch Central Bank.

Dutch Central Bank (DNB)

The Dutch Central Bank (DNB) oversees the financial health of the country’s financial institutions and examines whether they apply strict checks on their customers to prevent money laundering [6].

Netherlands’ Financial Intelligence Unit (FIU)

The Netherlands’ Financial Intelligence Unit (FIU) serves as the central reporting point for unusual transactions as per the Dutch Money Laundering and Terrorist Financing (Prevention) Act (Wwft) [7].

Main Regulations

The Netherlands, an active FATF member since 1990, has primary AML legislation in its Wwft [8]. In 2020, the Wwft underwent updates to comply with the EU’s Fifth Anti-Money Laundering Directive (5AMLD) [8].

Staying Compliant

Companies operating under AML regulations in the Netherlands must:

  1. Perform customer due diligence
  2. Conduct “Know Your Business” (KYB) checks
  3. Implement transaction monitoring
  4. Report cash transactions exceeding €15,000 and suspicious transactions to the Dutch FIU
  5. Screen customers for sanctions, adverse media, and political exposure
  6. Maintain accurate client records for at least five years [9]

Penalties for Non-Compliance

Failure to comply with AML regulations can result in severe penalties under the Dutch Criminal Code, including fines and imprisonment [10].

References

[1] PricewaterhouseCoopers, “The Netherlands: Country Profile: An Overview,” PricewaterhouseCoopers, accessed March 8, 2023, https://www.pwc.com/gx/en/services/business-services/economic-services/publications/2022-23-npc-netherlands.html [2] “Dutch Central Bank Fines Coinbase €3.3 Million over Alleged AML Breaches,” Cointelegraph, December 20, 2022, https://cointelegraph.com/news/dutch-central-bank-fines-coinbase-3-3-million-over-alleged-aml-breaches [3] Elmer Ster, “Rabobank Paid €17M Over Four Years in Legal Fees Over Money Laundering Probe—“Dutch Public Broadcaster Documentary Reports,” Finextra, January 24, 2023, https://www.finextra.com/newsarticle/36442/rabobank-paid-17m-over-four-years-in-legal-fees-over-money-laundering-probe--dutch-public-broadcaster-documentary-reports [4] “Financial Institutions,” Netherlands Financial Intelligence Unit, accessed March 8, 2023, https://www.fiunl.nl/en/Supervision/Financial-institutions [5] “Autoriteit Financiële Markten (AFM)—Supervision and enforcement,” Autoriteit Financiële Markten, accessed March 8, 2023, https://www.afm.nl/en/supervision-and-enforcement [6] “DNB Bank,” De Nederlandsche Bank, accessed March 8, 2023, https://www.dnb.nl/en/home/ [7] “Netherlands (the),” Basel Institute on Governance, accessed March 8, 2023, https://www.baselgovernance.org/fiu-links/nederland/default.aspx [8] “Anti-Money Laundering and Anti-Terrorist Financing Act ‘Wwft’,” MinBuZa, accessed March 8, 2023, https://www.minbuza.nl/business-and-investing/legislation-and-regulations/anti-money-laundering-and-anti-terrorist-financing-act-wwft/Pages/default.aspx [9] “Procedures for Companies,” De Nederlandsche Bank, accessed March 8, 2023, https://www.dnb.nl/en/business-partner/procedures/Pages/procedures-for-companies.aspx [10] “Criminal Code,” Dutch Government, accessed March 8, 2023, https://wetten.overheidsdocumenten.nl/documenten/PG00000027966/20121211/01/AMMv2000115370/0B0007/?blz=88020588&termen=witwassen&mom=bso&slp=1000&scp=01&rde=50&res=10&exp=pdf&fileformat=3&max=10&page=1&bso=bso&treffid=1&doc=&docid=NTR000005160435