Financial Crime World

Title: Dutch Financial Institutions Strengthening the Fight Against Money Laundering and Terrorist Financing

Overview

The Netherlands has taken a firm stance against financial crimes by requiring financial service providers to conduct thorough investigations on their clients and associated parties. This initiative is in line with the Money Laundering and Terrorist Financing (Prevention) Act, also known as Wwft in Dutch.

Financial Institutions under Regulation

The following financial institutions are subject to these regulations:

  • Banks
  • Insurance companies
  • Civil-law notaries
  • Tax consultants

Customer Due Diligence (CDD)

When is CDD Required?

Financial institutions must perform CDD checks in the following scenarios:

  1. Before conducting a sales transaction or mediation project.
  2. Before closing a business deal with a client and providing them with services.

Types of Client Investigations

Individuals

For individuals opting to use financial services, they must prove their identities. The identity records must be kept for at least five years.

If the client is a legal entity:

  1. Determine the ultimate beneficial owner (UBO).
  2. Verify the identities of the actual directors or shareholders.

Risk Assessment

Financial institutions need to conduct a risk assessment based on:

  • The client’s background.
  • The type of service they request.
  • The potential risk of money laundering and terrorism financing.

Types of CDD Checks

Normal

Standard customer due diligence to establish a client’s identity.

Simple

For transactions with a low risk of money laundering or terrorism financing.

Comprehensive

For clients or transactions settled in high-risk countries or involving prominent political figures.

Reporting of Unusual Transactions And Cross-Border Constructions

Appraisers

Appraisers are not required to conduct client investigations but instead report any unusual transactions.

Estate Agents and Immovable Goods Mediators

Estate agents and immovable goods mediators should investigate the parties their clients partner with for the assignment.

Intermediaries

Intermediaries, such as accountants or tax consultants, need to report any cross-border constructions believed to be set up to avoid taxes to the Dutch Tax and Customs Administration.

For more detailed information on conducting customer due diligence checks, please visit the Dutch Tax and Customs Administration’s (Belastingdienst) website.