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Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act in the Netherlands

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The AML/CTF Act is a comprehensive law that regulates anti-money laundering and counter-terrorism financing activities in the Netherlands. In this article, we will summarize the key points related to recordkeeping and reporting, cross-border transactions, customer identification and due diligence, and reporting suspicious activity.

Recordkeeping and Reporting

The AML/CTF Act requires financial institutions to maintain accurate records of their clients, including:

Identification and Verification Information

• Financial institutions must collect and verify the identification information of their clients.
• This includes details such as name, address, date of birth, and other relevant identifying information.

Reporting Unusual Transactions

• Reports must be filed with the FIU for unusual transactions, which include:
  • Cash exchanges of €10,000 or more
  • Money transfers of €2,000 or more
• Institutions must report these transactions regardless of whether they are suspicious or not.

Cross-Border Transactions

The AML/CTF Act applies to cross-border transactions between the Netherlands and other countries. Institutions must report unusual cross-border transactions to the FIU, including:

Information Required

• The client’s name and identification details
• Ultimate beneficiary owner (UBO) information
• Time and place of the transaction
• Reasons for deeming it unusual

Customer Identification and Due Diligence

The AML/CTF Act requires financial institutions to perform customer due diligence, which includes:

Simplified Procedure

• For low-risk clients or transactions:
  • Institutions can use a simplified procedure that involves less stringent identification and verification requirements.

Standard Procedure

• For most clients:
  • Institutions must identify and verify the client and its representative, UBO, purpose, and nature of the transaction.
  • They must also verify the source of funds.

Enhanced Procedure

• For high-risk clients (e.g., politically prominent persons) or transactions:
  • Institutions must conduct more in-depth research into the origin of the funds.

Reporting Suspicious Activity

Institutions must report unusual transactions to the FIU, regardless of whether they are suspicious. The threshold for reporting is lower than “suspicious,” and institutions are exempt from liability if they report in good faith and line with their duties under the AML/CTF Act.