Financial Crime World

Netherlands Struggles to Effectively Regulate High-Value Dealers in Precious Metals and Stones

Amsterdam - The Netherlands has made significant progress in combating money laundering (ML) and terrorist financing (TF), but a major challenge remains: effectively regulating high-value dealers in precious metals and stones.

Effective Regulation Remains a Challenge

According to the Financial Action Task Force (FATF), the country’s anti-money laundering and counter-terrorist financing measures are good, but there is room for improvement. The FATF report highlights that while the Netherlands has a robust system of domestic coordination and cooperation on AML/CFT issues at both policy and operational levels, it struggles to effectively regulate high-value dealers in precious metals and stones.

Scope of the Problem

  • Approximately 18,000 lawyers and 7,000 dealers in precious metals and stones operate in the country.
  • Many of these individuals do not carry out activities subject to Dutch AML/CFT regulations.

The Port of Rotterdam: A Hub for Illegal Activities

The Port of Rotterdam, Europe’s largest port, plays a crucial role in European import and export activities, including significant volumes of illegal drugs, particularly cocaine from South America. The Netherlands’ culture of tolerance towards soft drugs has been identified by the government as a contributing factor to the prevalence of drug crime and associated organized criminality.

Methods Used for Money Laundering

Criminals use a variety of methods to launder their illegal proceeds, including:

  • Licensed banks
  • Dealers in high-value goods
  • Intermediaries
  • Purchasing real estate
  • Using companies or underground banking and unlicensed payment service providers
  • Terrorism related to religious extremism presents the main TF risk, but other terrorism threats exist, including right-wing terrorism

Room for Improvement

The report praises the Netherlands’ good understanding of its ML/TF risks, as reflected in national risk assessments (NRAs) and sectoral assessments, policies, projects, and cases. However, it notes that many FIs and firms met by the Assessment Team were aware of the NRAs’ conclusions but noted that they do not provide sufficient granularity on specific sectoral risks.

Key Strengths

  • The Netherlands has a robust domestic coordination and cooperation on AML/CFT issues at both policy and operational levels.
  • The country is seeking to explore and expand measures to intensify this domestic coordination, leveraging various platforms to facilitate public-public, public-private, and private-private partnerships to coordinate on AML/CFT and counter proliferation financing (CPF).

Conclusion

The FATF report concludes that while the Netherlands has made significant progress in combating ML/TF, it must continue to improve its regulation of high-value dealers in precious metals and stones and ensure that all sectors, including DNFBPs, are subject to effective AML/CFT measures.