Dutch Financial Institutions Must Comply with Strict Anti-Money Laundering Regulations
Overview
The Netherlands remains an attractive destination for businesses, boasting a competitive business climate and leading technology innovations. However, financial companies entering the Dutch market must be aware of the country’s strict anti-money laundering (AML) regulations to avoid hefty fines from regulators.
Recent Cases
Recently, US crypto exchange Coinbase was slapped with a 3.3 million euros ($3.6 million) fine by the Dutch Central Bank for failing to obtain the correct registration in the Netherlands before offering services. Similarly, Rabobank, one of the top-three biggest banks in the Netherlands, faced investigation and fines for suspected violations of the country’s AML law following an instruction from the Dutch Central Bank to fix its customer due diligence procedures.
Institutions Required to Comply
The following institutions must comply with AML regulations in the Netherlands:
- Banks
- Crypto service providers
- Investment firms
- Clearing institutions
- Insurers
- Trust services
- Electronic money institutions
- Pension funds
- Real estate agencies
Regulatory Bodies
The Authority for the Financial Markets (AFM) is the country’s key financial regulator, supervising the conduct of the entire financial sector. The Dutch Central Bank and the Financial Intelligence Unit also play crucial roles in enforcing AML regulations.
Compliance Measures
To comply with AML regulations, firms in the Netherlands must implement a range of measures, including:
- Client identification and verification
- Transaction monitoring and reporting
- Sanctions screening
- Adverse media screening
- Record-keeping
Penalties for Non-Compliance
The Dutch Criminal Code prohibits money laundering and imposes severe penalties, including imprisonment and fines. In 2018, ING Groep NV was slapped with a record-breaking fine of 775 million euros ($900 million) for violating AML regulations.
Consequences of Non-Compliance
Firms operating in the Netherlands must be aware of the country’s AML regulations to avoid falling foul of the law. The consequences can be severe, and fines can reach up to 10% of a company’s annual turnover.
FAQs
Q: Is the Netherlands a high-risk country for money laundering?
A: The Netherlands has a highly digitized, globalized, and open economy, making it vulnerable to money laundering. However, the FATF has not included the Netherlands in its list of countries with strategic deficiencies.
Q: Who regulates AML in the Netherlands?
A: The Authority for the Financial Markets (Autoriteit Financiële Markten, or AFM), Dutch Central Bank, and Financial Intelligence Unit regulate Anti-Money Laundering regulations in the Netherlands.
Q: What is the Netherlands’ Anti-Money Laundering Act?
A: The Anti-Money Laundering and Anti-Terrorist Financing Act (Wet ter voorkoming van witwassen en financieren van terrorisme – Wwft) is the primary AML regulation in the Netherlands.
Q: What is KYC in the Netherlands?
A: KYC in the Netherlands stands for “Know Your Customer”, or the process of client identity verification during onboarding.