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  • Compliance & Business Integrity
  • 07-02-2017

According to the Dutch Supreme Court [Hoge Raad], adding “dirty” money to “ordinary” legal assets may qualify as money laundering.

As the Supreme Court found in its “contagion ruling” in 2010, the addition of illegally obtained assets may mean, under certain circumstances, that the total assets (i.e. the flow of funds into which the money is absorbed) are classified as “illegally obtained” assets. The entirety of the assets then becomes subject to confiscation by the Prosecution Service. And “contagion” may occur quicker than you may think. One example might be if your business has earned money from an activity for which a permit is required without actually having the permit. So in short, it is theoretically possible that your entire assets can be confiscated because of a single punishable act.

As a result of the entry into force of an amendment that criminalises “‘simple money laundering” that theory has now become less theoretical (see our previous blog about it). Briefly, the amendment means that items that are present as a result of a criminal offence committed by the accused himself can now also be confiscated. Previously, there was a ground for exclusion that meant that items could not be confiscated if the underlying offence could not be prosecuted, for example because of a lack of evidence. That allowed perpetrators to get away with it and a lot of the proceeds of crime remained untouched. The legislature considered both those effects to be undesirable. The amendment now means that money laundering can be proved more quickly and the proceeds confiscated.

In our view, the impact of the amendment goes too far. Confiscation is a punitive measure and the law says that no greater amount can be confiscated than was gained through the punishable act. That legal and illegal assets are combined does not mean that it is impossible to determine what portion of the total has been obtained illegally. Every suspect flow of funds should therefore be investigated separately and on that basis an assessment should be made of whether it derives from crime; only then should the amount concerned perhaps qualify for confiscation. We consider that the current approach creates more problems than it solves.

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