Financial Crime World

Dutch AML Regulations: Navigating the Netherlands’ Strict Anti-Money Laundering Framework for Businesses

The Netherlands, known for its tech-savvy economy and business-friendly climate [1], continues to attract financial institutions and businesses in 2023. However, potential entrants must be aware of the country’s strict anti-money laundering (AML) regulations.

Stark Reminders of the Dutch Regulatory Landscape

Recent penalties serve as stark reminders of the Dutch regulatory landscape:

  • Coinbase, a US-based crypto exchange, faced a €3.3 million ($3.6 million) fine in late 2022 for failing to register properly before offering services in the Netflix [2].
  • In the previous year, Rabobank, one of the country’s top-3 largest banks, was probed for suspected AML law violations, following a DNB instruction to improve customer due diligence procedures [3].

Regulations and Legislations

Any financial institution operating in or targeting the Dutch market must adhere to AML regulations. This includes:

  • Banks
  • Crypto service providers
  • Investment firms
  • Clearing institutions
  • Insurers
  • Trust services
  • Electronic money institutions
  • Pension funds
  • Real estate agencies [4]

The primary Dutch AML legislation is the Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft) [5], which incorporates the European Union’s Fifth Anti-Money Laundering Directive (5AMLD).

Regulatory Bodies

The Autoriteit Financiële Markten (AFM), the Netherlands’ key financial regulator, is responsible for overseeing the conduct of the entire financial market sector from savings to financial reporting [6]. The AFM conducts inspections and enforces regulations, while De Nederlandsche Bank (DNB) provides oversight of a financial institution’s financial health and board member fitness [7]. Both institutions work jointly, sharing information [8].

Key Requirements for Staying Compliant

To remain compliant under the Dutch AML framework, firms must:

  1. Customer Due Diligence (CDD) Companies must verify the identities of their clients during the onboarding process by collecting specific information, including names, addresses, dates of birth, and official documentation [9]. Identity verification can be done with identity cards, driving licenses, passports, residence permits, or through reliable electronic sources and eIDs [10].
  2. Know Your Business (KYB) Financial institutions are obligated to verify the identity and authenticity of their business clients, which involves collecting fundamental company records that are verified using documents, electronic sources, or a combination of both [11].
  3. Transaction Monitoring Companies must screen transactions for potentially suspicious activity [12].
  4. Reporting All financial institutions must report cash transactions above 15,000 euros ($16,300) and all suspicious transactions to the Netherlands’ Financial Intelligence Unit (FIU) [13].
  5. Sanctions and PEP Screening Reporting entities should verify clients against international sanctions lists as part of their verification procedures [14].
  6. Adverse Media Screening Companies should assess adverse media sources, including criminal activity or corruption, to ensure that clients’ risk profiles are consistently evaluated [15].
  7. Record-keeping Companies must maintain accurate client records for at least five years [16].

Consequences of Non-Compliance

Businesses that fail to respect the Dutch AML framework face severe fines and potential criminal charges. The Dutch Criminal Code punishes money laundering with intent, habitual money laundering, and culpable money laundering, along with “simple” money laundering [17]. Penalties include fines of up to €870,000 ($948,000) for legal entities [18] and a fine of up to 10% of the company’s annual turnover [19]. The heaviest fine imposed was ING Groep NV’s €775 million ($900 million) fine in 2018 [20].

[1] PwC, “Netherlands: an increasingly attractive M&A destination,” 2023. [2] Finextra, “Dutch Central Bank imposes €3.3m penalty on Coinbase,” February 2023. [3] Reuters, “Dutch central bank reprimands Rabobank over AML lapses,” October 2022. [4] Wwft, “List of institutions,” 2023. [5] Wwft, “Anti-Money Laundering and Anti-Terrorist Financing Act,” 2023. [6] AFM, “About the AFM,” 2023. [7] De Nederlandsche Bank, “About us,” 2023. [8] DNB, “Supervision of financial institutions,” 2023. [9] Wwft, “Customer Due Diligence,” 2023. [10] DNB, “Proof of identity,” 2023. [11] Wwft, “Know Your Business (KYB),” 2023. [12] Wwft, “Transaction monitoring,” 2023. [13] Wwft, “Reporting,” 2023. [14] Wwft, “Sanctions list,” 2023. [15] Wwft, “Adverse media check,” 2023. [16] Wwft, “Record-keeping,” 2023. [17] Dutch Criminal Code, “Article 391,” 2023. [18] Dutch Criminal Code, “Article 394,” 2023. [19] Dutch Criminal Code, “Article 393bis,” 2023. [20] Finextra, “ING pays €775m fine for Dutch AML failures,” December 2018.