New rules on Customer Due Diligence and the reporting of suspicious transactions are about to enter into force. In addition, The Netherlands Authority for the Financial Markets announced a stricter monitoring of the reporting of unusual transactions by investment firms and investment funds.
The Dutch Act implementing the Fourth Anti Money Laundering Directive implements the Fourth EU Anti-Money Laundering Directive (4AMLD) by amending the Dutch Act on the prevention of money laundering and financing of terrorism (Wet ter voorkoming van witwassen en financiering van terrorisme, Wwft).
The most important changes are:
The obligation to carry out customer due diligence will continue to be based on a risk-based approach. Institutions will in all cases be required to conduct a risk analysis. With respect to the possibility to carry out a simplified CDD, institutions may no longer automatically apply such a simplified CDD in specific circumstances. Institutions may only rely on these circumstances as part of a justification for simplified CDD after conducting a risk analysis.
The definition of an ultimate beneficial owner (UBO) will be amended. An UBO is a natural person who ultimately owns or controls 25% or more of the shares or voting rights in the entity or for whose account a transaction or activity is being performed. 4AMLD requires all legal entities to identify the natural person(s) who are their UBO. In cases where there is no UBO, the senior managing officials (management board) of the legal entity must be treated as the UBO.
The scope of the Wwft will be extended to all gambling service providers and professional or business persons selling goods for which cash payments are made or received of € 10,000 or more. The current threshold for cash payments is € 15,000.
The powers of regulators to enforce compliance with the Wwft will be extended. The maximum penalty that may be imposed will be increased from € 4 million to € 5 million. A turnover-related penalty of up to 10% of an institutions consolidated annual turnover is introduced for serious offenses. In extreme circumstances, a breach of the Wwft can also be enforced by withdrawing the license of the institution.
Regulators will be required to publicly disclose their decisions to impose administrative sanctions. These decisions will be made available on their website.
The implementation deadline of 26 June 2017 has expired. It is expected that the implementing Act will be adopted in the summer of 2018.
The text of the implementing Act and the explanatory memorandum thereto can be found here.
Strict monitoring of transaction reporting
On 18 December 2017, the Dutch Authority for the Financial Markets (Autoriteit Financiële Markten, AFM) announced that it will monitor the reporting of unusual transactions more strictly. The Netherlands Financial Intelligence Unit reported that both in 2016 and 2017, only 4 unusual transactions have been reported by investment firms and investment funds. The AFM believes this number is too low. The AFM indicated that it may take enforcement measures it if appears that unusual transactions have not been reported. The AFM also expects investment firms and investment funds to actively investigate whether their clients are involved in matters disclosed in the Paradise Papers.
The announcement of the AFM can be found here.