Financial Crime World

Dutch Financial Institutions Must Prioritize Sanctions Compliance to Avoid Legal Consequences

As a financial service provider or investment firm in the Netherlands, it is crucial to stay informed about national and European sanctions imposed on clients. The Sanctions Act requires financial institutions to freeze funds, withhold financial services, and refrain from supplying financial means to individuals or organizations listed on sanctions lists.

Compliance with Regulations

The Dutch Authority for Financial Markets (AFM) and the Netherlands Central Bank (DNB) closely monitor compliance with these regulations. Additionally, the UN Security Council can impose financial sanctions, requiring institutions to carry out international sanctions, including:

  • Freezing funds
  • Withholding financial services
  • Refusing to provide financial means to individuals or organizations on the list

Verification and Reporting Requirements

In addition to regularly checking clients against sanctions lists, institutions must also verify whether customers are affiliated with organizations on these lists. If a client is listed, financial services cannot be offered, and the institution must:

  • Carry out the sanctioned actions
  • Notify the AFM

To stay informed about current sanctions, institutions can subscribe to DNB’s Dutch-language news service, which provides regular updates on European and national sanctions.

Reporting Requirements:

  • In cases where clients are listed on sanctions lists or are suspected of being affiliated with such organizations, financial institutions must report this information to the AFM.
  • If a proposed transaction involves a client on a sanctions list, specific reporting requirements apply, and institutions must notify the Financial Intelligence Unit – The Netherlands in these instances.

Consequences of Non-Compliance

Failure to comply with sanctions regulations can have severe legal consequences, emphasizing the importance of prioritizing compliance for financial institutions operating in the Netherlands. It is essential to stay informed about current sanctions and adhere to reporting requirements to avoid legal consequences.