Financial Crime World

Dutch Financial Crime Threat Landscape: A Comprehensive Assessment by the Netherlands Banking Association

The much-awaited Financial Crime Threat Assessment of The Netherlands 2023-24 by the Netherlands Banking Association (NVB) is now available. This comprehensive report provides an in-depth understanding of the current financial crime threats in the country, serving as a crucial input for individual risk management processes of financial institutions in The Netherlands.

Background

The Dutch financial sector’s approach to combating financial crime underwent a significant shift with the ‘risk-based roundtables’ led by the Dutch Central Bank (DNB). These roundtables emphasized the need for more concrete guidelines and collaboration to combat financial crime effectively. This in turn facilitated the development of the Financial Crime Threat Assessment.

Methodology and Objective

The Assessment is rooted in publicly available information, further enhanced by expert input from banking experts from major institutions such as Rabobank, ING, ABN AMRO, de Volksbank, and Triodos, as well as public sector experts. The primary objective is to build a comprehensive understanding of the financial crime threats in The Netherlands contributing to effective risk management and gatekeeper capabilities among financial institutions.

Key Findings

  1. Relevant Financial Crime Characteristics: The Netherlands, being an international trade centre, vibrant technology hub, socially and culturally diverse, politically stable, and home to mature industries, contributes significantly to its unique financial crime landscape.
  2. Compiled List of Financial Crime Threats: Over 88 potential financial crime threats have been identified and classified based on their association with one another.

Selected Threats Elaborated

The following 20 financial crime threats are further elaborated:

  • Arms trafficking: Illicit trade in weapons, including small arms and light weapons, often associated with other criminal activities.
  • Bribery and corruption: The misuse of public or private power for personal gain, often undermining public trust and social integrity.
  • Concealment of Beneficial Ownership: Hiding true ownership of assets, often used as a tactic to launder money, finance terrorism, and engage in other illicit activities.
  • Concealment of Identity: Hiding true identity for the purpose of committing fraud or other financial crimes.
  • Drugs economy: Production, distribution, sales, and consumption of drugs, which often involve money laundering and organized crime.
  • Environmental crime: Activities that harm the environment, such as illegal mining, logging, poaching, and waste dumping, often associated with corruption and money laundering.
  • Extremism: Financing of extremist groups and related criminal activities like human trafficking and money laundering.
  • Fragmentation of payment landscape: Increasing complexity in the payment landscape due to the rise of digital payments, making it more difficult to detect and prevent financial crimes.
  • Market Facilitators: Intermediaries involved in importing and exporting goods, who can be exploited for money laundering and other financial crimes.
  • Modern slavery: Forced or involuntary labor, often associated with debt-bondage and human trafficking.
  • Organized crime in transport hubs: Criminal activities, such as smuggling and money laundering, often associated with transport hubs.
  • Payment fraud: False or misrepresented fund transfers, cheque fraud, or card payments, affecting both businesses and individuals.
  • Public funding fraud: Misappropriation of public funds, often involving complex schemes and networks.
  • Sanction evasion: Violating international sanctions to support entities or individuals under embargo, posing significant financial and reputational risks.
  • State actors: Engagement of state officials, employees, or even entire institutions in financial crimes for personal gain.
  • Tax evasion: Evading payment of taxes through fraudulent means, often facilitated by complex business structures.
  • Terrorism financing: Providing financial resources to support terrorist activities, posing significant financial, reputational, and safety risks.
  • Trade-based money laundering: Laundering money through international trade transactions, often difficult to detect.
  • Underground banking: Legal or illicit banking activities outside of formal banking channels, posing significant financial, regulatory, and reputational risks.
  • VAT fraud: Misappropriating value-added tax (VAT) by manipulating the supply chain or records, often affecting multiple countries.

Conclusion

The Dutch Banking Association’s Financial Crime Threat Assessment of The Netherlands 2023-24 offers valuable insights into the current financial crime threats in the country. This assessment serves as an input for individual risk management processes for financial institutions and can support collaboration between public and private entities to combat financial crime effectively.