Financial Crime World

Dutch Financial System Fails to Meet International Standards on Anti-Money Laundering and Terrorist Financing

The Netherlands is facing criticism for its failure to meet international standards in combating money laundering (ML) and terrorist financing (TF). Despite significant efforts, the country’s financial system remains susceptible to ML due to its large financial center, openness to trade, and size of criminal proceeds.

Assessment by FATF

The Financial Action Task Force’s (FATF) 40+9 Recommendations were used as a framework for assessing the Netherlands’ anti-money laundering and counter-terrorist financing measures. The report found that while the country has criminalized ML fully, its legal framework is incomplete in some areas.

Areas of Improvement

  • Verifying beneficial owners: The Netherlands’ legal framework does not require verifying the beneficial owners of companies, trusts, and other legal entities.
  • Simplified due diligence: The country’s simplified due diligence requirements are not sufficient to identify high-risk customers and transactions.
  • Reporting regime: The reporting regime for suspicious transactions needs improvement, including prompt reporting.

Strengths and Weaknesses

Strengths

  • The Netherlands’ Financial Intelligence Unit (FIU) has been praised for its professionalism, both domestically and internationally.
  • Financial investigations have not always been effective in pursuing prosecutions for ML or related offenses.

Weaknesses

  • Supervision of anti-money laundering and counter-terrorist financing obligations is based on broad powers, but some gaps in the legal framework need to be filled.
  • The Criminal Procedure Code should be revised to enable foreign countries’ assistance in searching and seizing evidence in ML cases.
  • Money laundering should be made an extraditable offense regardless of the predicate offense involved.

Conclusion

While the Netherlands has made significant progress in combating money laundering and terrorist financing, it still needs to improve its legal framework and implementation of anti-money laundering and counter-terrorist financing measures. The country’s financial system remains vulnerable to ML and TF due to incomplete legal frameworks and inadequate supervision.