Dutch Efforts to Combat Money Laundering and Terrorist Financing Show Promise but Require Further Improvement
The Netherlands has made significant strides in combating money laundering and terrorist financing, but a recent assessment suggests that more needs to be done to address some key weaknesses.
Strong Inter-Agency Coordination and International Cooperation
According to the report, the country’s measures are yielding good results, with strong inter-agency coordination and cooperation with international partners being notable strengths. This effective collaboration has enabled the Dutch authorities to share intelligence and best practices, ultimately leading to better outcomes in combating money laundering and terrorist financing.
Key Areas for Improvement
However, despite these successes, there are still several areas that require attention:
Risk-Based Approach Insufficient
The Dutch authorities have been criticized for not doing enough to prevent legal persons from being used for criminal purposes, despite having a robust risk-based approach in place. This indicates a need for more effective supervision and enforcement mechanisms to address this critical weakness.
Regulatory Framework Lacking
The country’s regulatory framework is also seen as lacking in some areas, particularly when it comes to virtual asset service providers (VASPs). The lack of clear guidelines and regulations makes it challenging for VASPs to operate within the law and hinders efforts to combat money laundering and terrorist financing.
Main Money Laundering Risks
The Netherlands’ main money laundering risks are linked to:
- Fraud: accounting for 90% of all Dutch proceeds of crime
- Drug-related offenses
- Terrorist Financing Risks: from religious extremism, such as ISIL, and extreme right-wing terrorism
Success Stories
Despite the challenges, the report highlights several areas where the Dutch authorities have been successful:
Effective Detection and Investigation
The country has effectively detected and investigated cases of terrorist financing, primarily related to foreign terrorist fighters.
Engagement with Non-Profit Sector
The Netherlands has taken steps to engage with the non-profit sector to prevent its abuse for terrorist financing purposes.
Recommendations for Improvement
To address the concerns highlighted in the report, the Dutch authorities should:
- Improve Risk-Based Supervision: addressing unlicensed activity and ensuring proportionate and dissuasive sanctions for non-compliance with preventive measures.
- Enhance Access to Beneficial Ownership Information: ensure that there is access to adequate, accurate, and current beneficial ownership information.