At the European level, with the advent of the fourth and fifth European anti-money laundering directives, the fight against money laundering and terrorist financing has been stepped up. On 25 July 2018, the Netherlands responded to the implementation of the fourth Directive and implemented it in the form of the Financial Supervision Act (Wwft). The fifth anti-money laundering directive must be implemented no later than 10 January 2020. Increasingly, fines are being issued by the Dutch Authority, with the expectation that supervision will no longer be carried out by the government, but by companies. Recently, for example, Rabobank received a fine for failing to comply with money laundering rules.
Implementation of the Directive brings necessary changes for companies, which have to take into account obligations under the Wwft in the fight against money laundering and terrorist financing. In order to enable companies to comply with the new provisions of the Wwft, the supervisory authority announced that it would continue to be lenient until 1 January 2019. It is therefore important to be careful.
What are the main changes to the Dutch wwft?
The most important changes are that companies should pay more attention to their own risk analysis and assessment and the establishment of a compliance and audit function. The definition of the ultimate beneficial owner or Ultimate Beneficial Owner (UBO) has been further expanded. Under the Wwft, companies are obliged to establish the identity of an UBO, if existing, with their customers. In the qualification of a person as an UBO, ultimate ownership or ultimate control is important. For the B.V. and N.V. this is a natural person who is directly or indirectly economically entitled to more than 25% of the company, or the person exercising control. Listed companies are excluded from this 25% rule. Therefore, even if someone holds an interest of less than 25%, one can be regarded as an UBO on the basis of ultimate control. UBOs must be registered in the UBO register as part of the trade register. In addition to the UBO, the definition of a politically exposed person (PEP) has also been changed. Persons with Dutch nationality living in the Netherlands can also now be a PEP. The Netherlands Authority for the Financial Markets (AFM) indicates that in the event that a client is an UBO or a PEP, more stringent client investigation measures must be taken, such as appropriate measures to determine the source of the assets and resources and permission from senior management to enter into or continue this business relationship or to carry out this transaction.
Increasingly strict controls of the Wwft: more fines
In the Netherlands, the supervisory authority responsible for compliance with the Wwft is the Netherlands Bank (DNB), the AFM, the Financial Supervision Office (BFT), the Tax and Customs Administration (Belastingdienst Bureau) and the Public Prosecution Service. Recently, there was the largest settlement ever reached in the Dutch business community on the grounds of violation of the Wwft. ING, which facilitated money laundering, settled for EUR 775 million. With the introduction of the new Wwft, the supervisory authority’s arsenal of sanctions has been both strengthened and expanded. The maximum fine has also been increased and sanctions imposed are, in principle, published by name and number. It is expected that the supervisor will monitor compliance with the Wwft more closely. The DNB recently indicated that banks and financial institutions are too lax in their control of money laundering.
Dutch Bill on crypto currency?
Minister Hoekstra recently submitted a bill to amend the Wwft with regard to crypto currency, at least companies offering services in crypto currency. This would include crypto money within the ambit of the Wwft. Pursuant to the bill, providers of crypto-currencies must investigate the identity of their clients and report unusual transactions to the Financial Intelligence Unit Netherlands. In addition, providers must be extra vigilant with regard to money flows coming from outside the European Union and must more closely supervise transactions from countries registered by the European Commission where there is a high risk of money laundering and terrorist financing.
Dutch Minister Hoekstra has stated that the bill is nothing more than a Dutch translation of the European Anti-Money Laundering Directive. However, before the bill can be truly effective, it is intended that other European member states will also take a strict look at legislation on crypto currencies and that, currently, it would be too easy to circumvent the law. Minister Hoekstra says it is important that Europe takes a closer look at transactions and investments made with crypto currencies.
Money laundering rules demand a lot from businesses
In short, more and more is demanded of a company. The legislator requires the company to be vigilant and to keep track of its customers, with the supervisor as its enforcer. These additional obligations in the fight against money laundering and terrorist financing therefore require extra vigilance on the part of companies. Non-compliance with the Wwft may result in high fines being imposed by the supervisor. As a company, it is therefore important to properly investigate whether the obligations under the Wwft are being met. Especially now that the supervisory authority will enforce the new provisions of the Wwft more strictly, with effect from 1 January 2019.
However, the question is how far a company should go in assisting in the fight against money laundering and terrorist financing. It could be argued that, in principle, the responsibility for this fight lies with the government. In this way, the company is increasingly portrayed as a gatekeeper of the government. In addition, not fulfilling this role can result in a fine being imposed by the supervisory body. On the other hand, companies do have a duty of care to report suspicious transactions.
Dutch Lawyer’s advice on financial law
Do you have questions regarding the Wwft or a fine imposed by the Dutch supervisor? Feel free to contact us