Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft)
The AFM’s supervision with regard to the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (in Dutch Wwft) is aimed at safeguarding and promoting sound and ethical business operations and at preventing undertakings from knowingly or unknowingly becoming involved in money laundering or the financing of terrorism.
Financial institutions as Gatekeepers Against Financial-Economic Crime
Financial institutions play a critical role in preventing and detecting financial-economic crime and therefore play an indispensable role in keeping the financial system safe. We supervise to ensure that certain financial institutions adequately fulfil their role as gatekeepers.
These enterprises must prevent their products and services from being misused for money laundering, terrorist financing, or by sanctioned persons, entities and groups. This requires continuous monitoring and effective risk management by financial institutions throughout the entire business relationship with the client.
Financial institutions are legally obliged to conduct customer due diligence, report unusual transactions, and exclude sanctioned persons, entities and groups. We apply risk-based supervision to these obligations and monitor compliance with Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (in Dutch Wwft) and the Sanctions Act 1977.
Anti-Money Laundering and Anti-Terrorist Financing Act / Wwft and Sanctions Act Guideline
To support compliance with the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (in Dutch Wwft) and the Sanctions Act, we have drawn up the Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft) and Sanctions Act Guideline (pdf, 620 kB). This guidance provides practical tools, explanations and interpretations of the open standards contained in this legislation and enables financial institutions to fulfil their obligations in a correct and effective manner. The guidance is not legally binding, but should be regarded as an explanatory document to support compliance with the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act ( Wwft) and the Sanctions Act.
Customer Due Diligence
Customer due diligence must, inter alia, enable your undertaking to verify the identity of the customer and the ultimate beneficial owner (UBO) of the customer, and to establish the origin of the customer’s assets. The depth of the customer due diligence must be proportionate to the risks of money laundering and terrorist financing associated with the type of customer, the business relationship, product or transaction.
When assessing a customer’s country risk, your undertaking must make use of the publications of the Financial Action Task Force (FATF), in which high-risk countries are identified. These high-risk countries make insufficient efforts to prevent money laundering and terrorist financing. These publications on the FATF website are reviewed annually in February, June and October, where warranted.
The lists of high-risk countries (High-risk and other monitored jurisdictions) can be found on the FATF website.
An overview of countries designated by the European Commission as countries with a higher risk of money laundering or terrorist financing can be found on the European Commission’s website (EUR-Lex - 02016R1675-20220313 - EN - EUR-Lex).
Good Practices and Statutory Obligation
Reporting Obligation
Deviating transaction patterns may give your undertaking reason to designate a transaction as unusual. Your undertaking is required to immediately report such (intended) unusual transactions to the Financial Intelligence Unit-the Netherlands (FIU-the Netherlands). The FIU-the Netherlands’ primary task is to further investigate unusual transactions and enrich them with additional information, in order to assess whether these transactions can be classified as suspicious. Such transactions may then be shared with law enforcement and intelligence services.
On the FIU-the Netherlands website, the reporting procedure Obligation to report - FIU-Nederland is described step by step and you can find more information on this topic. You can also find information there on how to register your undertaking with FIU-the Netherlands in order to report (intended) unusual transactions.
Reported (intended) unusual transactions are included in the highly secure database of FIU-the Netherlands and are treated with strict confidentiality. For reporting purposes, it is sufficient if there is merely a suspicion that an (intended) transaction is related to money laundering or terrorist financing. The threshold for reporting an (intended) unusual transaction is therefore low. When assessing whether an (intended) transaction should be designated as unusual, you must use the indicators set out in the Wwft Implementation Decree 2018.
In certain cases, unusual transactions may also qualify as an incident under the Financial Supervision Act (Wft) and must, in such cases, also be reported to the AFM as soon as possible. The AFM has compiled a number of examples of unusual transactions that have been reported to FIU-the Netherlands.
Safe Reporting for Gatekeepers
Reporting unusual transactions is mandatory. This obligation is laid down in the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (in Dutch Wwft). Failure to report unusual transactions, or failure to do so in a timely manner, constitutes a criminal offence. Gatekeepers can report to the FIU - the Netherlands in a secure manner. When a report is submitted, and also thereafter, the safety of the reporting party is safeguarded in various ways. For example, only FIU - the Netherlands is able to view and analyse the report.
Frequently Asked Questions
At what point should an institution perform customer due diligence?
Identification, verification and determination of the ultimate beneficial owner (UBO) should take place before the business relationship is entered into or a transaction is carried out (pursuant to Article 4, first paragraph, of Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft).
An institution may choose to complete the identification of the customer or the UBO during the establishment of the business relationship in order not to unnecessarily disrupt normal business operations. The conditions for this are that this is permitted only in low-risk situations and that the identification is completed as soon as possible after the initial contact.
It is permitted to open an account, including an account for securities transactions, before the verification of the customer’s identity has taken place, provided that the institution ensures that the account cannot be used until the verification has been completed (pursuant to Article 4, third paragraph, of Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft)
What does confidentiality (tipping-off prohibition) entail?
An undertaking that has reported an unusual transaction or has provided additional information to FIU-the Netherlands is, pursuant to Article 23 of Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft), required to maintain confidentiality regarding this report, as well as the fact that this may give rise to further investigation.
The obligation of confidentiality does not apply where disclosure is required under the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft).
What does indemnification in relation to the reporting obligation entail?
An undertaking that, in the context of the reporting obligation, has reported an unusual transaction is not liable for damage suffered by a third party as a result thereof, unless it is established that, in the context of all the facts and circumstances, the report should not reasonably have been made.
In order to qualify for criminal-law immunity in respect of a reported transaction as referred to in Article 19 of Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft), it is explicitly required that the report was made in good faith. This means that the undertaking did not itself knowingly cooperate in the relevant acts.
In the context of civil-law indemnification as referred to in Article 20 of Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft), the condition applies that the undertaking acted in the reasonable belief that it was complying with the obligation to (promptly) report unusual transactions.
What is a PEP?
PEPs are persons who hold or have held a prominent public function, as
well as their immediate family members and close associates. The concept
of a PEP is no longer limited to foreign politically exposed persons;
domestic politically exposed persons also fall within this definition.
A
PEP includes, in any event (see also Article 2 of Dutch Anti-Money
Laundering and Anti-Terrorist Financing Act (Wwft) Implementation Decree
2018)
- a head of state, head of government, minister, deputy minister or state secretary;
- a member of parliament or of a similar legislative body;
- a member of the governing body of a political party;
- a member of a supreme court, constitutional court or of another high-level judicial body whose decisions are not subject to further appeal, except in exceptional circumstances;
- a member of a court of auditors or of the board of a central bank;
- an ambassador, chargé d’affaires or high-ranking officer of the armed forces;
- a member of the administrative, management or supervisory body of a state-owned enterprise;
- a director, deputy director, member of the board or person holding an equivalent position in an international organisation.
Where the customer or the ultimate beneficial owner (UBO) is a PEP, enhanced customer due diligence measures should be applied. These include, for example, appropriate measures to establish the source of wealth and funds, and obtaining approval from senior management for entering into or continuing the business relationship or for carrying out the transaction.