Money Laundering: Hiding Criminal Proceeds in the Netherlands’ Financial System

Publication date: June 29, 2020

Understanding Money Laundering

In the world of organized crime, money is the kingpin, and money laundering is the lifeline that keeps it alive in the legal economy. This intricate activity not only thrives in the Netherlands but also allows criminals to enjoy their ill-gotten gains without raising eyebrows. Let’s explore the concept of money laundering and its workings in the Dutch context.

The Necessity of Money Laundering

Criminal profits, whether from drug trafficking, fraud, or other illegal activities, must first be laundered before they can be spent without suspicion. For instance, a drug kingpin making profits from the cocaine trade would want to finance his luxurious lifestyle while staying under the radar. To achieve this, he sets up a seemingly legitimate business, creating a fake turnover and profit to make it appear as if his income is legal.

However, money laundering is a multifaceted phenomenon with countless intricate and varying forms. Criminals move funds through numerous countries and companies using foreign currency or cryptocurrencies. They issue false invoices, disguise their transactions during everyday activities, or purchase luxuries and investments.

The Three Stages of Money Laundering

Money laundering is a process consisting of three primary stages:

1. Placement: Introducing tainted money into the financial system, often through bank deposits or other methods.
2. Layering: Disguising the proceeds of crime through complex transactions that make it difficult to trace their origin.
3. Integration: Fully assimilating the laundered money into the financial system, often through the purchase of luxury goods or investments.

Dutch Money Laundering Laws

The Dutch definition of money laundering extends beyond these three stages as per Dutch law. It’s not necessary for all phases to take place for a money laundering conviction. Objects and rights can also be laundered. Money laundering is considered a criminal offense under the Dutch Criminal Code, and offenders may face imprisonment.

Consequences of Money Laundering

Money laundering poses significant threats to the economy and society as a whole:

• Billions of Euros in criminal proceeds are laundered through or in the Netherlands annually.
• Money fuels the majority of crimes, and money laundering encourages further criminal behavior by enabling criminals to integrate their illegal gains into everyday life.

Combating Money Laundering

The fight against money laundering is crucial in maintaining the economy and upholding societal integrity. It involves:

• Enforcement and legislative efforts.
• Implementing measures to hinder criminals from profiting from their criminal enterprises.

For instance, requiring car dealers to report large cash transactions is one such measure. By ensuring that criminals face the consequences of their actions, it becomes increasingly difficult for them to profit from their illegal ventures.