CENTRAL AUTHORITY FOR REPORTING
The Financial Intelligence Unit Nederland (FIU-Nederland). The FIU-Nederland was instituted on 1 January 2006 and includes the former Meldpunt Ongebruikelijke Transacties (MOT) of the Dutch Ministry of Justice and the Bureau for Police Support of the National Public Prosecutor (BLOM). The FIU-Nederland is part of the International Police Service (IPOL) of the National Police Services Agency (KLPD).
In case of reporting, a separate registration procedure should first be followed. For registration see: www.fiu-nederland.nl/nl/registreren.html.
After registration, an information pack is sent to the reporting institution together with a signature card and necessary security codes. These codes can then be used to download a reporting tool that can be found on the website of the FIU Netherlands. That tool should be used for reporting the transaction and any possible future unusual transactions.
ANTI-MONEY LAUNDERING REGULATOR(S)
The Dutch National Bank (DNB) is the regulatory authority for the banking sector, trust and company services providers, money service businesses and casinos;
The Financial Markets Authority (AFM) is the regulatory authority for investment institutions and companies;
The Bureau of Financial Supervision (BFT) is the regulatory authority for lawyers, notaries, accountants and tax advisors;
The Tax and Customs Administration, Department Hollands Midden, Unit MOT is the regulatory authority for traders in goods of exceptional value accepting cash payments of EUR 15,000 or more, and real estate agents.
HAS THE THIRD EU MONEY LAUNDERING DIRECTIVE BEEN IMPLEMENTED? IF NOT, WHEN IS IT EXPECTED TO BE IMPLEMENTED?
The Dutch authorities transposed the Third Directive into national law at the beginning of August 2008. On 1 August 2008, the Act on Prevention of Money Laundering and Financing of Terrorism (Wet ter voorkoming van Witwassen en Financieren van Terrorisme, WWFT) entered into force.
Through the WWFT, the provisions of the Third Money Laundering Directive (2005/60/EG) and the ‘Implementation Directive’ (2006/70/EG) were transposed into national law.
In addition, an implementation decree (Uitvoeringsbesluit Wet ter voorkoming van Witwassen en Financieren vam Terrorisme) and an implementation regulation (Uitvoeringsbesluit Wet ter voorkoming van Witwassen en Financieren van Terrorisme) were implemented on 1 August 2008,, holding (i.a.) reporting indicators, and indicating which documents can be used for client identification purposes.
ARE LAWYERS COVERED BY ANTI-MONEY LAUNDERING LEGISLATION?
LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.
The WWFT, enacted on 1 August 2008.
The Economic Crimes Act (Wet op de Economische Delicten, WED), article 1 section 2 (prohibiting violation of articles 2, 3 section 1, 4 section 1, 5 sections 1 and 3, 8, 16, 17 section 2, 23 sections 1 and 2, 33 and 34 (WWFT).
Articles 420bis to 420quinquies (prohibiting money laundering) and 140 Dutch Penal Code (prohibiting membership of a criminal organisation).
Sanctions on various crimes (threat, arson, criminal organization, manslaughter, crimes against ships or aircraft, swindle, murder, destruction, kidnapping, serious assault with premeditation, embezzlement) under the Dutch Penal Code are increased when committed with a terrorist intention.
Recruiting to commit a terrorist crime (article 205 paragraph 3 Dutch Penal Code).
The WWFT applies to lawyers (‘advocaten’) under specific circumstances (see below). The WED and Dutch Penal Code apply to lawyers subject to Dutch jurisdiction requirements.
In addition, lawyers are subject to the 2009 by-law on the administration and financial integrity, issued by the Dutch Bar Association (Nederlandse Orde van Advocaten (NOVA)).
The by-law on the administration and financial integrity entails various client due diligence obligations and an obligation for the lawyer to consult the Dean if he makes or accepts a cash payment of more than EUR 15,000. In addition this by-law refers in article 11 to the obligations of lawyers prescribed by the WWFT:
"Advocates shall keep accounts of their practice and shall keep the books in such a way that compliance with the provisions of the Law on the prevention of money laundering and terrorism financing can be satisfactorily established at any moment."
This by-law can be enforced through disciplinary law.
Regarding lawyers’ enforcement of the WWFT and the relevant, abovementioned, articles of the Economic Crimes Act takes place through disciplinary law as well. Enforcement by criminal law will only take place if the lawyer himself is suspect of money laundering or its predicate crime.
ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?
The WWFT applies, under certain conditions, to lawyers (‘advocaten’).
The definition of ‘advocaat’ can be found in the Dutch Lawyers Act (Advocatenwet, “Aw”). Articles 1 and 16b “Aw” provide that lawyers registered as ‘advocaat’ in The Netherlands, as well as visiting lawyers from EU Member States, other States party to the European Economic Area, being Iceland, Norway and Liechtenstein (EEA), and from Switzerland that are not yet registered as lawyers in The Netherlands, are (subject to certain conditions) regarded as ‘advocaat’.
Such registered or visiting lawyers are therefore subject to the regulations of the WWFT concerning legal services they render in or from The Netherlands, unless exempted by the WWFT (see below). Such lawyers will also be subject to the Dutch rules of professional practice, including the by-law on the administration and financial integrity.
The “Aw” does not regard visiting lawyers from other countries than EU and EER member States and Switzerland as ‘advocaat’, as long as they have not registered themselves according to the requirements of article 1 (and further) “Aw”. Such lawyers are, however, under strict conditions allowed to advise clients in The Netherlands.
Since these visiting lawyers are not regarded as ‘advocaat’, they are, arguably, not subject to the WWFT. They will, however, be subject to comparable legislation in the country where they are registered as lawyers.
LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.
The NOVA has, on its website, published an extensive file regarding the WWFT.
In that file, lawyers will find a NOVA Guideline for lawyers regarding compliance with the WWFT obligations, a NOVA step-by-step-compliance plan, the Manual for lawyers, notaries, accountants, tax advisers and accounting offices issued by the Ministry of Finance and the FATF Guidance document for lawyers.
In case of questions, lawyers can contact the NOVA Helpdesk at +31 70 335 35 86.
In addition, the BFT gives guidance in the frequently asked questions (FAQ) section on its website (www.bureauft.nl). The same goes for the Dutch FIU (www.fiu-nederland.nl).
IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?
Yes. Though the BFT is the formal supervising authority, the NOVA systematically supervises the lawyer's compliance with the WWFT through an auditing programme, based on the bar's by-laws regarding the administration and financial integrity. In doing so, the NOVA aims to better protect the professional legal privilege lawyers have. The NOVA periodically reports to the BFT on an anonymous basis about any systemic results that might arise from the periodic audits that were, under the mandate of the local Deans, performed by NOVA auditors.
The NOVA is also involved in enforcing compliance with the WWFT insofar as the local Deans can complain about any acts or omissions that do not befit a good lawyer. Such conduct will (at least) include failure to comply with the requirements of the WWFT which leads to frustration of the supervision by the NOVA auditors or the BFT. In addition, the BFT can, if so desired, inform the local Deans about any (purported) violations of WWFT obligations by lawyers or directly file a complaint. A complaint might lead to disciplinary action against the lawyer concerned.
DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.
When does the WWFT apply to lawyers?
The WWFT, as it aims to prevent money laundering and terrorism financing, contains CDD obligations and an obligation to report so-called unusual transactions.
The WWFT applies to ‘advocaten’ when they (article 1 section 1 sub a under 12 and 13 WWFT):
act for and on behalf of clients concerning any financial transaction or real estate transaction, or
give legal advice or assistance concerning the:
buying and selling of real property;
managing of money, securities, coins, bank notes, precious metals, gems or other things of value;
establishment or management of legal persons and other bodies as mentioned in article 2 of the General Tax Act (Algemene Wet inzake Rijksbelastingen, AWR);
buying and selling or take-over of companies; or
fiscal activities similar to those of external accountants and tax advisors.
Lawyers giving any other sort of legal advice or assistance are therefore not regulated by the WWFT.
In addition, regulated lawyers are exempted from CDD and reporting obligations where they perform activities concerning the ascertaining of the legal position of a client, the representation and defence of a client in legal proceedings, the rendering of legal advice before, during or after judicial proceedings, and the rendering of advice regarding the commencement or avoidance of such legal proceedings (article 1 section 2 WWFT).
The duty to perform CDD exists when (article 3 section 3 WWFT):
the lawyer establishes a business relationship with a client, in or from the Netherlands;
the lawyer carries out an occasional transaction on behalf of a client amounting to EUR 15,000, or more, whether the transaction is carried out in a single operation or in several operations, which appears to be linked and have a joint value of at least EUR 15,000;
there are indications that the client is involved in money laundering or the financing of terrorism;
the lawyer has doubts about the veracity or adequacy of previously obtained customer data; or
the risk that an existing client is involved in money laundering or the financing of terrorism gives rise to the performance of such due diligence.
The CDD requirements include the following obligations (article 3 section 2 WWFT):
identifying the client and verifying his identity;
identifying, where applicable, the ultimate beneficial owner (UBO) and taking risk-based and adequate measures to verify his identity, including, as regards legal persons, trusts and similar legal arrangements, taking risk-based and adequate measures to understand the ownership and control structure of the customer;
establishing the purpose and intended nature of the business relationship; and
as far as possible, conducting ongoing monitoring of the business relationship including scrutiny of transactions undertaken throughout the course of that relationship, so as to ensure that such transactions are consistent with the attorney’s knowledge of the client and his risk profile, including, where necessary, an investigation into the source of funds.
In addition to the WWFT obligations on CDD, the by-law on the administration and financial integrity issued by the NOVA also contains CDD obligations:
Advocates are obliged when accepting an assignment to satisfy themselves of the identity of the client and, if necessary, the identity of the intermediary who extended the assignment, unless the nature or circumstances of the case make this impossible.
The advocate may trust in the correctness of the information provided by the client as long as there are no reasonable indications to the contrary.
Should the advocate have any reasonable doubt or if there are circumstances to justify such reasonable doubt as to the accuracy of the information provided by or on behalf of the client, the identity of the client or intermediary or the legitimacy of the purpose of the assignment, the advocate shall investigate the accuracy of the information provided, the background of the client, the intermediary or the purpose of the assignment, as the case may be, unless the nature or circumstances of the case make this impossible.
DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?
Yes. Article 3 section 4 WWFT provides that lawyers (and other regulated institutions) can adopt CDD measures in accordance with the risk of money laundering or the financing of terrorism the client, business relationship, product or transaction entails. Also see below with respect to simplified and enhanced CDD.
ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?
In addition to normal CDD measures, enhanced CDD measures must be applied in situations where a business relationship or transaction by its nature holds a higher risk of money laundering or the financing of terrorism (article 8 WWFT).
The WWFT mentions a few examples of such higher risk situations that might also apply to lawyers, including clients who do not appear in person for identification purposes.
In such situations, the lawyer has to take measures to compensate for the higher risk. Such measures may include:
verification of the identity of the client by means of supplementary documentation, data or information;
assessing the authenticity of the documents that have been presented; or
ensuring that the first payment that bears connection with the business relationship or transaction is made in favour of or charged to an account of the client with a bank with its seat in an EU or EEA Member State or in a State which has been indicated by the Minister of Finance and which has a licence to operate in that Member State or State.
The WWFT considers a client who is a politically exposed person (PEP’s) as a higher risk as well. In such case:
the decision to enter into such relationship or perform such transaction should be made or authorised by designated persons within the office;
sufficient measures should be taken in order to establish the source of funds used in the business relationship or transaction; and
on-going monitoring of the business relationship should be carried out.
ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?
Simplified CDD measures may be applied with respect to certain low risk clients (articles 6 and 7 WWFT). Such clients include:
banking and investment institutions and money service businesses with their seat in The Netherlands or EU or EEA Member States;
listed companies of which the securities are admitted to a regulated market in one or more EU or EEA Member States and their 100% subsidiaries;
Dutch government institutions; and
which are charged with a public function by virtue of the Treaties on the European Union, the European Communities or derivative versions thereof;
of which the identity is known;
of which the activities and accounting practices are transparent; and
which account to an institution of the European Communities or a government institution of an EU or EEA Member State, or with respect to which other appropriate procedures exist for the purpose of examining the activities.
Before applying simplified CDD measures, sufficient data must be collected in order to be able to assess whether the client qualifies as one of the clients mentioned in articles 6 and 7 WWFT. In any event, no simplified CDD measures may be applied in case of indications that the client concerned is involved in money laundering or the financing of terrorism, or if there is a higher risk of involvement in such activities (articles 6 section 1 and 7 section 1 jo. 3 section 3 under c and e WWFT).
If simplified CDD measures can be applied identification of the client concerned and verification of his identity, and other CDD measures mentioned above do (in principle) not have to take place.
ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE
Article 9 WWFT provides that lawyers (and other regulated institutions) may rely on CDD previously carried out by the following regulated institutions:
accountants, tax advisors, notaries and lawyers based in The Netherlands, or EU and EEA Member States;
registered financial institutions as mentioned in article 1, section 1 under a 1-3 WWFT;
certain registered life insurance companies and life insurance intermediaries;
registered investment institutions and companies; and
trust and company service providers.
The institutions who’s CDD is relied upon are obliged, upon request of the other party, to provide all relevant identification, verification and other data regarding the identity of the client or (if applicable) the UBO.
In addition, article 10 WWFT provides that lawyers (and other regulated institutions) may have their CDD carried out by third parties, except for ongoing monitoring and control obligations (see below). It is preferred that such assignment is done in writing.
Please note, that at all times, the regulated institution itself remains responsible for compliance with the obligations of the WWFT.
WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?
The general duty to report unusual transactions only applies to lawyers in case they are obliged to perform CDD. The same rules and exceptions apply.
If and when under a general duty to report, lawyers are obliged to report any intended or performed unusual transaction (article 16 section 1 WWFT). Please note that, based on Dutch case-law and the explanatory memorandum of the WWFT and its predecessor, the reporting obligation is limited to transactions discovered in the course of the services provided to the client.
However, the BFT and the Ministry of Finance have commented that any unusual transaction should be reported and are preparing a legislative proposal accordingly.
Unusual transactions are defined as transactions where there are reasons to assume that they could be linked to money laundering or terrorism financing. It is left to the judgement of the lawyer concerned to assess whether any transaction qualifies as such. Such assessment should preferably be made by taking the Financial Action Task Force typologies and NOVA guidance into account.
In addition, lawyers should always report any transaction of EUR 15,000 or more paid to them or through their assistance in cash, bearer cheques or other similar payment measures.
The time limit for reporting unusual transactions is within 14 days after the lawyer has knowledge of the fact that the transaction is "unusual" the transaction. The following circumstances and data surrounding the transaction should be disclosed to the FIU-Nederland (article 16 section 2 WWFT):
the clients identity, and, insofar as possible, the identity of the beneficiary of the transaction;
the nature and number of the clients identification document(s);
the nature, time and place of the transaction;
the provenance, destination and amount of the monies, securities, precious metals or other values concerned;
the circumstances giving rise to the unusual character of the transaction;
a description of any possible high value goods concerned in a transaction of over EUR 15,000; and
any additional data that might be required by future implementation decrees.
The FIU, after having received the report, is also entitled to request additional information (article 17 WWFT).
DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?
No. In case of an existing reporting obligation, lawyers cannot invoke legal privilege.
DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?
The WWFT contains various waivers in this respect.
Criminal indemnity (article 19 WWFT)
Data or intelligence reported in accordance with articles 16 and 17 WWFT may not be used as the basis of a criminal investigation or a prosecution regarding the suspicion of, or as evidence regarding an accusation of money laundering or terrorist financing against the institution that reported the unusual transaction or the persons working for such institution that have been cooperating in the reporting of such unusual transaction.
Please note that there exists no criminal indemnity regarding any other purported crimes, such as possibly related crimes like the handling of stolen property or goods, swindling, falsification of documents or the membership of criminal organisations.
In addition, any data or intelligence provided to the FIU-Nederland under the reasonable assumption that the WWFT required so, may not be used as the basis of a criminal investigation or a prosecution regarding the suspicion of, or as evidence regarding an accusation of violating the obligation to observe professional secrecy by the institution that reported the unusual transaction or the persons working for such institution that have been cooperating in the reporting of such unusual transaction.
Civil indemnity (article 20 WWFT)
Lawyers having reported data or intelligence in accordance with article 16 WWFT are not liable for any damages that a third party, including the client, may occur as a result of the report, unless such party would argue convincingly that, based on all facts and circumstances of the case, the lawyer could not and should not have reasonably reported.
ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?
The WWFT contains no obligations to obtain consent from authorities to proceed with legal advice or transactions. However, if the lawyer concerned has reported regarding a case in which he renders advice or assists in a transaction, it might be wise to abstain from further services to the client. Not only does a lawyer run the risk to become engaged in criminal activities if he proceeds with the advice or transaction he reported on, or forfeit any indemnity described above that might originally have been rendered to him, continuing the relationship with the client might also be contrary to the rules of professional practice.
IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE
Article 23 WWFT contains a tipping-off prohibition. Accordingly, lawyers may not disclose that information has been reported, the contents of the report or the fact that the report might give rise to further investigation. The prohibition does not apply to lawyers informing their clients with the aim to prevent them from engaging in illegal activities. Furthermore, the prohibition does not apply to information provided to certain regulated institutions with the aim to prevent (further) money laundering or financing of terrorism.
DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT
Article 4 WWFT provides that the following CDD measures must be carried out before entering into a business relationship with or performing a transaction for the client:
identifying the client and verifying his identity; and
identifying, where applicable, the UBO and taking risk-based and adequate measures to verify his identity, including, as regards legal persons, trusts and similar legal arrangements, taking risk-based and adequate measures to understand the ownership and control structure of the customer.
The verification of the identity of the client and/or the UBO may only be postponed in situations where there is a low risk of money laundering and financing of terrorism and immediate acting for the client concerned is necessary in order to not disturb the services rendered. In that case, verification of the client’s identity must be carried out as soon as possible after the first contact with the client.
Article 5 WWFT provides that it is forbidden to enter into a business relationship with or perform a transaction for the client if no (sufficient) CDD measures were carried out. If a business relationship with the client already exists, such relationship should then be terminated. These prohibitions do not, of course, apply in case simplified CDD measures may be carried out (see above).
ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE
As mentioned above, normal CDD requirements entail the duty to conduct, as far as possible, ongoing monitoring of the business relationship including scrutiny of transactions undertaken throughout the course of that relationship, so as to ensure that such transactions are consistent with the attorney’s knowledge of the client and his risk profile, including, where necessary, an investigation into the source of funds (article 3 section 2 under d WWFT).
Such duty to perform ongoing monitoring always exists in case of performing services to a PEP (article 8 section 4 under c WWFT).
DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION
None other than those mentioned above.
HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?
Case law has shown that complaints were filed against and disciplinary sanctions imposed on lawyers that had abused their trust/clients' accounts for money laundering purposes. In addition, there are known cases where lawyers have been suspected of money laundering and have been prosecuted and sentenced accordingly.
HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?
The FATF has conducted a mutual evaluation report of The Netherlands in 2010. One of the findings of the report is that in relation to supervision, the main shortcoming is that secrecy issues prevent the exercise of supervision of lawyers by the designated supervisor. The report continues: "Furthermore, the scope of legal privilege may unduly hinder the possibility for law enforcement authorities to access information and documents held by notaries, lawyers (…), including upon foreign request."
The reporting of lawyers is very low. The report states: "Inadequate awareness of potential ML vulnerabilities contributing to underreporting."
The Dutch Ministries of Justice and Finance are now generally discussing with the Dutch Bar a new form of supervision as far as lawyers are concerned, supervision on compliance with AML regulation included. It is not clear yet whether and in which way the above system will be adjusted.
INFORMATION SUPPLIED BY:
Rob van der Hoeven