A ban on cash payments to traders of more than EUR 3,000, a commitment to withdrawing the EUR 500 banknote from circulation, greater strengthening the cooperation and information-sharing between banks, an improved information position for investigation authorities, and making more funds available – these are some of the measures proposed in the joint plan of action to combat money laundering that the Dutch Ministers of Finance and Justice and Security submitted to the House of Representatives on 30 June 2019. The measures are intended to make it more difficult for criminals to launder money. The plan was drawn up in consultation with various regulatory and investigation authorities and relevant parties in the financial sector.
It became apparent last year that on a number of occasions, banks in both the Netherlands and Europe had been seriously remiss in tackling money laundering. The submission letter accompanying the plan referred to the transaction of the ING case as an example. Moreover, the amounts involved in money laundering in the Netherlands rises into the billions; it is estimated that EUR 16 billion is laundered in the Netherlands each year. This mainly involves the proceeds of drugs-related crime and fraud, approximately half of which originates abroad. The shortcomings in tackling money laundering and the large sums involved prompted the Ministry of Finance and the Ministry of Justice and Security to draw up a joint plan to combat the problem.
The measures proposed in the plan are grouped into three main categories, aimed at (i) increasing the barriers against criminals channelling illegally obtained income into the financial system; (ii) increasing the effectiveness of the “gatekeeper” function and how it is supervised, thus excluding the proceeds of crime from the financial system; and (iii) reinforcing investigation and prosecution, so that criminals can be dealt with even more quickly and effectively. These categories are emphatically interlinked; the proposed measures are intended to ensure a more effective approach and better protection of our financial system.
The first category, increasing the barriers, involves preventing money laundering “at the frontline”, thereby limiting the channelling of proceeds of crime into the financial system and making criminal activity more difficult. One of the measures proposed in this context is aimed at preventing the misuse of large amounts of cash. The introduction of a ban on cash payments to traders of more than EUR 3,000 is intended to make it more difficult to launder large amounts of criminal assets by means of cash. Currently, an obligation to report cash payments in excess of EUR 10,000 applies to professional or commercial purchasers or sellers of goods. The ban on cash payments of more than EUR 3,000 does away with that obligation. The aim is to have the ban become law by 2021. The plan also involves withdrawing the EUR 500 banknote from circulation in order to prevent high-denomination laundering of the proceeds of crime. The European Central Bank (ECB) already stopped printing and issuing EUR 500 banknotes in 2019. The Dutch Central Bank will now call on the ECB to take the EUR 500 denomination out of circulation permanently.
One of the second-category measures – which focus on increasing the effectiveness of the “gatekeeper” function and how it is supervised – involves improving how private institutions cooperate and share information. It is important to note that the exchange of information envisaged in the plan will not replace such institutions’ own responsibility for screening their clients, properly monitoring transactions, and reporting unusual transactions to the Dutch Financial Intelligence Unit (FIU). Within this category of measures, various ways of sharing information are being introduced, including increasing the effectiveness of joint transaction monitoring by banks by means of a “TM utility”. According to the plan, the value of joint transaction monitoring lies in the ability to detect unusual transactions that are not assessed (or cannot be assessed) as unusual by an individual bank, but when viewed in combination with transactions by the same client at other banks do indicate (or may indicate) money laundering. At present, national legislation still prevents sharing information in this way because outsourcing the transaction monitoring is prohibited under the Money Laundering and Terrorist Financing (Prevention) Act (Wwft). Moreover, transactions contain sensitive information and sharing information counts as a new way of processing personal data, meaning that a legal basis for processing will have to be incorporated into the Wwft to allow banks to share this data within the framework of the GDPR. The plan states that a bill for amending this legislation will follow shortly.
The third category of measures focuses on investigation and prosecution. One measure involves improving the information position of the investigation authorities, for example by increasing the scope for Wwft regulators to share information with bodies within the Financial Expertise Centre (FEC) (a partnership between authorities charged with combatting, detecting, and prosecuting money laundering). This option for sharing information is already included in the Fourth Anti-Money Laundering Directive (Implementing) (Amendment) Act, which is expected to enter into force in January 2020. In addition to improving the information position of the investigation authorities, more funds will be made available to the Fiscal Intelligence and Investigation Service (FIOD), the FIU, and the Public Prosecution Service to enhance detection of money laundering, combat fraud, and prevent undermining by criminal activities. This will involve a structural sum of EUR 29 million from 2021 onwards, making it possible to launch additional projects and investigations.
The aim of the plan and the associated measures is to guarantee a secure and honest financial system. Preventing and combating money laundering requires a joint approach by government, regulators, the FIU, the Public Prosecution Service, the FIOD, and relevant parties in the financial sector such as banks, accountants, and insurers. Closer cooperation between all these parties and their joint efforts are aimed at stepping up the battle against money laundering. The Ministers’ submission letter makes clear that the Netherlands intends to be one of the international leaders in that battle. The plan will therefore make a significant contribution to boosting the effectiveness of the Dutch financial system. In this context, the forthcoming evaluation of the country’s measures to combat money laundering and terrorist financing and their effectiveness by the Financial Action Task Force (2021) will be an important indicator of what has been achieved.
At the end of this year, the Ministers of Finance and Justice and Security will consult again with the parties involved to discuss the progress and effectiveness of the planned measures, with agreements also being made about the follow-up, so as to ensure continued focus. At the end of the year, the Dutch House of Representatives will be informed of the results and current situation as regards the measures envisaged.
Update: On 7 November 2019, the Minister of Finance offered an overview of legislative proposals, including the 'Money Laundering Approach Act'. This act will contain the measures from the joint plan of action to combat money laundering.
Do not hesitate to contact us if you have any questions about the plan or the various measures proposed.