Financial Crime World

Netherlands Slower to Address Significant Issues in Anti-Money Laundering Efforts

A recent assessment by the Financial Action Task Force (FATF) has revealed that the Netherlands is slow to address significant issues in its anti-money laundering (AML) efforts, including unlicensed activity.

AML Challenges in the Netherlands

  • Most trusts cannot be established in the country, with the exception of mutual funds.
  • The use of nominee directors and shareholders, which are not recognized concepts in the country, exists in practice and is used in the management of conduit companies that have no real presence in the Netherlands.
  • Sanctions for failing to provide correct or up-to-date basic information are rarely imposed, and no cases of providing incorrect BO (business owner) information have been detected to date.
  • The Netherlands’ Business Register (BO) register was only 27% populated at the time of the onsite.

International Cooperation

Despite these concerns, the FATF report notes that the Netherlands provides timely and constructive responses to mutual legal assistance (MLA) and extradition requests. The country’s international cooperation on major cases involving virtual assets is also significant.

Risks and Challenges

  • The country has a large and globally interconnected financial system, with three Dutch banks controlling 82% of the sector’s assets.
  • Two of these banks have recently been part of a settlement with the Public Prosecutor for significant AML/CTF failings.
  • The Netherlands has a culture of tolerance, which can contribute to drug crime and organized criminality.

Methods Used by Criminals

Criminals use various 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

FATF Assessment Conclusion

The FATF assessment concludes that while the Netherlands has a good understanding of its ML/TF risks, there is room for improvement in risk understanding, particularly regarding the types of legal persons and arrangements in the country.

Recommendations

The report recommends that the country improve its domestic coordination and cooperation on AML/CFT issues at both the policy and operational levels. Overall, the FATF assessment highlights the need for the Netherlands to address its slow pace in addressing significant issues in its AML efforts, including unlicensed activity.