CENTRAL AUTHORITY FOR REPORTING
Financial Intelligence Unit - Netherlands (F.I.U.)
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 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.
From 1st January 2015 the local Bar Presidents will be the sole regulators regarding anti-money laundering for lawyers in each respective district.
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 van Terrorisme) and an implementation regulation (Uitvoeringsbesluit Wet ter voorkoming van Witwassen en Financieren van Terrorisme) were implemented on 1 August 2008, holding reporting indicators, and indicating which documents can be used for client identification purposes.
ARE LAWYERS COVERED BY ANTI-MONEY LAUNDERING LEGISLATION?
Yes. The local law covering anti money laundering is the ‘Anti-Money Laundering and Terrorist Financing Act’ (Wet ter voorkoming van Witwassen en Terrorisme financiering - WWFT). This Act also covers terrorism financing.
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 organisation, 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 administration and financial integrity, issued by the Dutch Bar Association (Nederlandse Orde van Advocaten, NOvA).
The by-law on administration and financial integrity entails various client due diligence obligations and an obligation for the lawyer to consult the local Bar president if he makes or accepts a cash payment of more than € 5,000. 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 take place through disciplinary law as well. Enforcement by criminal law will only take place if the lawyer himself is suspected of money laundering or its predicate crime.
In the revised Dutch Lawyers Act (Advocatenwet) – in force from 1st January 2015 – the local Bar presidents are appointed as the regulators responsible for supervision of compliance with anti-money laundering regulations (WWFT).
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.
Currently the Netherlands Bar (NOvA) offers guidelines for its members. These are regularly updated and are available on the website. The current regulator regarding anti-money laundering (Bureau of Financial Supervision, BFT) also has guidelines available which exclusively apply to lawyers in the Netherlands which are available on their website.
IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?
From 1st January 2015 the local Bar presidents will be solely responsible for the supervision of the anti-money laundering regulations (WWFT). The official supervisory tasks regarding anti-money laundering will be transferred from the BFT to the local Bar presidents once the revised Advocatenwet is in place.
DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY 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):
1. act for and on behalf of clients concerning any financial transaction or real estate transaction, or
2. give legal advice or assistance concerning the:
buying and selling of registered 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 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 appear 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:
1. 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.
1. 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.
2. 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. The WWFT has a risk-based approach. Institutions must assess the risks that accompany certain clients or products themselves, thus creating the possibility of adjusting their efforts related to these risks. This approach is part of their own rules of compliance and responsibilities. Internal rules must be aligned and should be extended in case of an increase of an estimated risk. The WWFT does not forcibly prescribe how an institution must achieve something, only what it should achieve. This is in accordance with the third EU money laundering directive on which the WWFT is based.
ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?
In addition to normal Client Due Diligence measures, enhanced due diligence 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) as a higher risk as well. In such a 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
other institutions 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 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 whose 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 when 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.
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 immediately after the lawyer has knowledge of the fact that the transaction is "unusual". The following circumstances and data surrounding the transaction should be disclosed to the FIU-Nederland (article 16 section 2 WWFT):
the client’s identity, and, insofar as possible, the identity of the beneficiary of the transaction;
the nature and number of the client’s 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 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 it, 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
Yes. 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 WWFT).
DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION
Lawyers need to keep the information about their clients and the business they conducted available up to 5 years after the last transaction was completed. This implies that lawyers have to keep a file within their systems (article 33 WWFT).
Lawyers also need to keep the knowledge regarding the WWFT up to date. This implies that adequate training has to be in place for all the lawyers which associated with the firm (article 35 WWFT).
HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?
There have been cases of lawyers implicated in money laundering or similar in the past. Approximately two years ago a lawyer was convicted and given one year in prison and a fine of € 65,000 for money-laundering (case: LJN: BX9129). More recent cases are not known.
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?
Yes. The last Mutual Evaluation Report was in 2011, and the Netherlands was relieved of the follow-up procedure by the Financial Action Task Force as of February 2014.
INFORMATION SUPPLIED BY:
Virgil J. Matroos LL.M, Senior Supervisor
Nederlandse Orde van Advocaten
P.O. Box 30851, 2500 GW
The Hague, Netherlands