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  • Compliance & Business Integrity
  • 13-10-2020

To improve prevention and combating of money laundering, the Dutch government has drawn up a joint 'Plan of action Anti-Money Laundering' (Plan van aanpak witwassen) including various measures to increase the barriers to money laundering. The plan of action was published on 30 June 2019 by the Minister of Finance and the Minister of Justice and Security. On 7 November last year, the Minister of Finance submitted an overview of legislative bills, including the Prevention of Money Laundering Act (Wet plan van aanpak witwassen), which includes some of the measures in the joint plan of action. Consultation took place in December and very recently, on 25 September 2020, the Council of Ministers agreed to the bill for the Prevention of Money Laundering Act. 

One of the proposed measures is to limit large cash payments. Cash is still a widely used means of money laundering, mainly because it is difficult to trace and therefore attractive for concealing the origin of illegal/criminal funds. There is currently no maximum for cash payments in the Netherlands. 

Traders (professional or commercial purchasers and sellers of goods) currently fall within the scope of the Money Laundering and Terrorist Financing (Prevention) Act (Wwft), if the payment for the goods in cash exceeds the amount of EUR 10.000, regardless of whether the transaction is carried out in a single payment or in the form of several associated payments. In such cases, traders are obliged to investigate their client and report unusual transactions to the Financial Intelligence Unit. 

The plan of action notes that the current legislation therefore completely disregards cash payments of less than EUR 10.000. And because the Dutch regulations are currently more flexible than in a number of neighbouring countries, it is easier for criminals to launder cash of illegal/criminal origin in the Netherlands. To counter this, the bill includes a total ban on cash payments of EUR 3.000 or more for traders, and that ban cannot be circumvented by means of several individual cash payments. The ban consequently removes the current obligations for traders of goods to do client investigation and report unusual transactions. It does not affect the objective reporting limits or the subjective reporting obligation for other Wwft-institutions, such as financial enterprises and other professional groups to which the reporting obligation applies. 

In the light of extensive consultations with supervisory authorities, investigation authorities, and other interested parties, a total ban on cash payments of EUR 3.000 and more would be the most effective means of preventing payments with illegal/criminal money within the legal economy. A ban on cash payments above a certain amount is clearer and easier to enforce, but also less burdensome. Lowering the application threshold for the Wwft (from EUR 10.000 to EUR 3.000) would mean that there would be more cases in which traders would need to gather information about the client and the transaction, that clients would have to provide information sooner, and that it would be necessary to assess more often whether an unusual transaction had taken place. This is not considered desirable. 

If the ban is contravened, the appointed supervisory authority (the Minister of Finance, represented by the Tax and Customs Administration’s Wwft division) can impose an order subject to a penalty for non-compliance (last onder dwangsom) or an administrative fine (bestuurlijke boete). Penalisation will also be included in the Economic Offences Act (Wet op de economische delicten). 

The Anti-Money Laundering Action Plan published on 30 June 2019 shows that the aim is to have the legislative bill including the ban enter into force as of 2021. The July 2020 update on the joint plan of action and the accompanying progress overview indicated that the ban on cash payments of EUR 3.000 and more would be submitted to the Council of State for its opinion after the summer recess. Given that the Council of Ministers approved the bill on 25 September 2020 and will forward it to the Council of State, it still seems feasible for the ban to enter into force by 2021. It should be noted that the exact content of the bill approved by the Council of Ministers has not been made known publicly.

Don’t hesitate to contact us if you have any questions about the legislative bill for the Prevention of Money Laundering Act and the Wwft. 
 

 

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