New feature: search engine screening!

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New feature: search engine screening!

Reading time: 2 min.

 From now on it is possible to perform search engine screening in addition to your screening of natural persons or companies through various (sanction-)lists. This is perhaps the way in which you are currently also performing your customer due diligence screening. Then you probably also have experienced what a time-consuming job this is, not to mention the difficulty of assigning a risk assessment to the results found...

We have made this a lot easier for you! Simply enter the search term at CDD On Demand, which you would also have entered in the search engine and you will immediately see how many results the search term has, with a risk indication! Let's get in to the details;

What does a search engine screening entail?

With this screening you have the option to screen natural persons and companies through all public information provided by the search engine Bing. In CDD On Demand you will immediately receive a risk indication based on all the information found. This will save you a lot of time and takes away a lot of hassle!

How does the screening work?

In addition to CDD On Demand proposing a number of good search terms, you also have the option of adding an extra search query, eg “Jantje + Money Laundering”. You get to see how many results have been found for this search and based on the results you will also receive a risk indication.  U krijgt vervolgens te zien hoeveel resultaten er zijn gevonden voor deze zoekopdracht en op basis van die resultaten ontvangt u ook een risico indicatie. 

Green = No results, this search probably does not indicate an increased risk.

Orange = Less than 10 results, this search may indicate an increased risk.

Red = More than 10 results, deze zoekopdracht geeft mogelijk een indicatie voor een verhoogd risico.

Why has the search engine screening been added?

This search engine screening serves as an additional safety, to identify possible risk indicators that may not have been identified when consulting previous data sources. An extra assurance! Better be safe than sorry!  Better be safe than sorry! 

Want to try it yourself?
Would you like to have a supporting tool for your customer due diligence screenings? CDD On Demand is the solution for you. With CDD On Demand you are able to screen through various (sanction-)lists, monitor your clients 24/7, perform UBO checks* and perform a search engine screening from now on!

Request free credits now and discover the features with trial account. 

 

*Performing a UBO check is not possible with a trail account. Please contact us for more information about our UBO check. 

What is money laundering?

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What is money laundering?

Reading time: 2 min.

Witwassen komt van oorsprong uit het Engels ‘’money laundering’’, wat letterlijk ‘’geld wassen’’ betekent. In het begin van de 20e eeuw, tijdens de industriële revolutie van de Verenigde Staten waren dollars nog gemaakt van katoenvezels. Deze dollars raakten snel vervuild en moesten worden vervangen, wat een kostbare zaak was. Sindsdien hebben de vervuilde dollars een andere betekenis gekregen, namelijk crimineel geld. 

 

Definition of money laundering

There are many different definitions for the act of money laundering. Some definitions focus more on the role of financial institutions in the money laundering process, while others focus more on relationships with the criminal circuit. The Dutch Tax Office defines money laundering as follows: 

''Money laundering means that illegally obtained assets are made legal, so that the illegal origin is no longer traceable.''

The definition of money laundering initially only concerned drug-related crimes, but in recent years the definition has grown to be much broader, based on a wider spectrum of basic offences. The Fourth European Anti-Money Laundering Directive provides a broader definition for money laundering. For the purposes of this Directive, the following acts, if committed intentionally, shall be considered as money laundering:

• The conversion or transfer of property, knowing that these have been acquired from a criminal activity or from participation in such an activity, with a view to concealing or concealing its illegal origin or helping a person involved in that activity to escape the legal consequences of his actions

• Concealing or masking the true nature, origin, location, disposal, changes, rights to, or ownership, of property, knowing that they have been acquired from a criminal activity or from participation in such activity;

• The acquisition, possession, or use of property, knowing, at the time of acquisition that such property has been acquired from a criminal activity or from participation in such activity;

• Participation in, aiding, abetting, aiding, inciting, facilitating, or giving advice for committing any of the acts referred to in the preceding letters.

There are different types of money laundering to be distinguished. For example, criminal law distinguishes between money laundering, habitual money laundering, money laundering, and simple money laundering. The different types of money laundering will be discussed in more detail in another blog.

In short, to launder money means to convert “dirty” money to money, which is said to be legally earned, through dubious practices or deception. 

 

A punishable offence

Anyone directly or indirectly responsible for money laundering is punishable. There is no singular or common penalty for money laundering. The punishment depends on the circumstances and the extent of the crime. The maximum penalties are known however, for intentional money laundering the maximum punishment is 4 years imprisonment or a fine of up to 78,000 euros. Debt laundering is punishable by a maximum penalty of one year in prison, or a fine of up to 78,000 euros. In addition, a person may be prohibited from practising certain professions, including the profession in which he has engaged in money laundering.

If someone only attempted to launder money but got caught, the maximum penalty is one third lower than if the crime is completed. If someone commits money laundering multiple times, there is a higher maximum penalty. The judge will consider that the previous sentence did not appear to have helped to prevent money laundering, making it more likely that a higher sentence is imposed. In addition, any suspended sentence will be converted to an unconditional sentence. 

Money laundering is a criminal offence because socially the norm is that when someone obtains something unfairly, it should be taken away in a fair manner. Therefore, if a person illegally withdraws money, it will have to be taken away under criminal proceedings. 

 

Conclusion

In short, money laundering is the process in which money from the criminal circuit ends up in the legal economy. There are different types of money laundering and money laundering is a crime punishable by penalties. These penalties depend on the circumstances and extent of money laundering, and, it will play a role whether the crime has been completed or not, and whether this is the first time such a crime has been committed. The penalties will be harsher the larger the extent of the crime, whether it was successful, and when it is a repeat offence of money laundering.

New! In addition to the Quote 500, now also the Dutch Top 500.000 of the richest shareholders. Facilitated by the State! Does the end justify the means?

New! In addition to the Quote 500, now also the Dutch Top 500.000 of the richest shareholders. Facilitated by the State! Does the end justify the means?

Reading time: 6 min

Since September 27 you’re able to request Dutch UBOs at the Chamber of Commerce. You will receive a name, month and year of birth, nationality and country of residence of the UBO, including an insight (range) into the size of the share. This new service has been facilitated by Europe and the affiliated countries with which all UBO information is exchanged.

The State does nothing about data protection. Everything is public; you only need to request a code from the Chamber of Commerce and pay.

Determining the value of a natural person is easy (shares * company balance sheet value). An address is easy to find because most holdings, for example, are on a private address and otherwise Google will help!

Risky for those involved? That the State thinks so is evident from the following. The State offers the possibility to make UBO’s, that are mentioned on a specific protection list, invisible. As a layman, this seems to me to be contrary to the principle in the constitution that all Dutch citizens should be treated equally in an equal situation. A lawyer is allowed break their teeth on this.

All in all, a gross violation of the privacy of approximately 500.000 UBOs under the motto “preventing money laundering and combating terrorism”. This substantiation and justification has virtually no value because money laundering in the Netherlands is mainly done by drug criminals, according to research by the University of Utrecht. It would surprise the undersigned if drug criminals can be found in a UBO register.

Then the statement about a hidden agenda of the State remains. Certainly not fancy but has happened before (see SyRI story below). Below an elaboration.

The introduction  

“More than 1.5 million organizations will have to deal with the UBO register by 2020. From 27 September, many organizations have to register UBOs in this new register. UBOs (Ultimate Beneficial Owners) are persons who have more than 25% of the economic interest in an organization ”. The above quote comes from the website of the Chamber of Commerce (KvK). Immediately a new source of income for the Chamber of Commerce. Companies have to pay for a UBO request. The State does not pay for the use of the Chamber of Commerce database! Also bizarre.

The UBO register provides insight into shareholders who have an economic interest of more than 25% or who have a say in companies, foundations and associations, among other things.

The consequences

The UBO register has consequences:

  1. The UBO register is in violation of the (European) GDPR, which must guarantee the privacy of natural persons. The State will argue that it is a more important interest, but the State is not always right and cannot properly assess such matters. In the case of System Risk Inventory (SyRI), the State has had to back down for the time being.
  2. It concerns many people. There are approximately 800,000 BVs in the Netherlands. Most BVs have several UBOs and a number of UBOs have several BVs, such as an operating company and a holding. The number of UBOs in the Netherlands remains a guess, but according to good marketing practice, we estimate that there are 500,000 +/- 100,000 UBOs in the Netherlands.
  3. The UBO register has (possibly) far-reaching consequences for the personal safety of shareholders and their families. The State also endorses this position, as appears from the exceptional rule that has been drawn up that will protect the privacy of certain UBOs (?). de privacy van bepaalde UBO’s (?) gaat beschermen.

The UBO Register will make the following information publicly available for approximately 500,000 shareholders and directors:

  1. First and last name
  2. Month and year of birth
  3. Nationality
  4. Country of residence
  5. The nature and size of the equity interest in a range
 

Violation of the privacy

Het bovenstaande is een flagrante schending van de AVG/GDPR. Punt 5 bijvoorbeeld, de aard en de omvang van het aandelenbelang is ook in een bandbreedte een zeer gevoelig financieel gegeven in de GDPR. The above is a blatant violation of the GDPR. Point 5, for example, the nature and size of the equity interest, even if it’s only a range, is a very sensitive financial data in the GDPR.

"Financial data are sensitive personal data that can say a lot about someone. It is therefore important that organizations such as banks and the tax authorities handle this carefully." This can be read on the website of the Dutch Data Protection Authority. Seems like the above does not apply to the State?

Risks for those involved?

The fact that there are risks associated with the dissemination of this information is known to the State. This is evident from the following in the supplementary regulations. “The UBO may submit a request to the Chamber of Commerce to block certain data”. This will be honored if one of the following situations is demonstrably involved:

  1. Exposure to a
  2. Disproportionate risk,
  3. A risk of fraud,
  4. Kidnapping,
  5. Blackmailing etcetera.

This is also possible if the UBO is a minor, is under guardianship or administration or has police security.

State protection is a sham

“The additional UBO data - the day of birth, the place of birth, the country of birth, the residential address, BSN and / or TIN and the underlying documentation showing the identity of the UBO and the exact nature and scope of the economic interest held by the UBO - are only accessible to competent authorities and FIU-the Netherlands ”. This text comes from a briefing of the Senate by the Ministry of Finance. Naturally, the State and about twenty government services, including the Tax and Customs Administration, have unlimited free access to the information.

This claim that “the additional UBO data” is protected by the State is an outlandish and pointless.

The opposite is true: anyone with access to the internet and common sense can make a reasonable estimate of the value of the shares on the basis of the company's balance sheet value (annual report available from the Chamber of Commerce).

The value of the shareholder and his family is equal to the share range * value of the company (s) found in the UBO register. The protected residential addresses are also not very difficult to find on the internet with a first and a last name in combination with a country of residence and a nationality.

Entrepreneurs are often known on the internet and the information is easy to find. The State could just as well have placed a target on the head of enterprising Netherlands with an additional amount.

The conclusion; the medicine is worse than the disease

Any sane person will ask himself whether the importance of “preventing money laundering and financing terrorism”, which is done by a very limited group of Dutch people, who probably cannot be found in a UBO register, outweighs the means and that is a massive privacy violation of the shareholders (often entrepreneurs). The alternative is a hidden agenda at the State. This behavior is unworthy of the State.

A parallel can be drawn with SyRI; this is a system of the State in which the privacy rights of the citizens were massively violated under the motto “anti-fraud”.

For more information click here

Lawsuit in the making
Source: Privacy Web

Privacy First will start a lawsuit against the UBO register with its lawyer Otto Volgant (Boekx Advocaten) for violation of European privacy law. Dutch law and the overlying European directive are in conflict with the European Charter for Fundamental Rights and the GDPR. Privacy First often conducts its strategic procedures on privacy with a coalition of stakeholders. Privacy First is currently identifying which parties can contribute to the case against the UBO register.

 

The Annual budget: the wealthy have to absorb the blow among others

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The Annual budget: the wealthy have to absorb the blow among others

Reading time: 3 min.

Last Tuesday was a very special Prinsjesdag. Not only did the COVID-19 virus dramatically change the ceremony, it also had a significant effect on changing the Annual budget (Miljoenennota) itself. Multinationals, the wealthy, the self-employed, and large companies without investments are going to have a difficult time in the coming year. On the other hand start-up companies, people with savings, and people on fixed salaries receive tax advantages. Pension rebates are expected to go primarily towards the public and healthcare sectors.

The government expects a budget deficit of 43 billion in 2021, and of 53 billion in 2020. Corona-related aid packages for businesses amounts to 46 billion in this fiscal year. Next year the estimated budget deficit is estimated to be 61% of GDP due to falling tax revenues.

Box 3 is addressed

The capital gains tax will be addressed next year. The tax-free capital, the amount of capital for which no tax must be paid, is increased from 30,846 euros to 50,000 euros. On the other hand, the wealthy with more than 50,000 euros will pay more capital gains task. On the calculated returns you no longer pay 30 percent taxes, but 31 percent.

Middle-class and start-ups get more benefits

By reducing the first income tax bracket and increasing the employment discount, the middle class is expected to grow about two percent on their net salary during the next year. The government also wants to help start-ups in the crowded housing market. An example is scrapping transfer tax for persons between the 18-35 years old who purchase their first. Investors who aim to buy a second (or third, fourth etc.) property to rent out must pay 8% tax on the transaction.

Action equals reaction?

The changes highlighted above are summarized from the Annual budget, these changes may affect starters, the middle class, and the wealthy, and they may cause changes in behavior as well.

The withdrawal of highly taxed investors from the housing market may create more room for first-time buyers, and as a result realtors and notaries will see an increased number of clients. The former will assist in the purchase of property, while the latter draws up purchase contracts, mortgage deeds, and the occasional co-habitation contract. The influx of new clients also means that realtors and notaries need to spend more time on client investigations, which can be quite time-consuming.

Just as these changes from the Annual budget may create an abundance of work for notaries and realtors, the same may happen for asset managers. Investors which might be deterred from investing in housing may instead opt to invest their capital through asset managers. Accepting new clients represents a high workload for asset managers, as their inventarisation procedures are very extensive. In addition to the Customer Due Diligence components of this procedure, which is also mandatory for realtors and notaries, asset managers also need to go through so-called "Know Your Customer" procedures. This step requires the creation of a comprehensive inventory which maps a client’s family situation, their financial position, and their knowledge of financial markets and previous experience

You can read more about the difference between CDD and KYC in our blog.

Conclusion

The new policy presented in the most recent Budget Memorandum could provide a boost of new customers at various organizations subject to the Wwft, such as brokers, civil-law notaries and asset managers. However, a thorough Wwft client due diligence takes a lot of time because it is difficult to meet all the requirements imposed by the Wwft. It is also difficult to keep an eye on what changes have been made to the continuously changing Wwft.

SCOPE FinTech Solutions has therefore set up CDD On Demand to support small to medium-sized companies in their Wwft obligations. You can purchase credits yourself via the webshop with which you can conduct a Wwft client investigation within three seconds. Based on this, it is checked within a few seconds whether your client poses an increased risk at one of the checked points, which means that you may need to perform an enhanced customer due diligence.

The CDD On Demand solution also offers the possibility to monitor your clients daily for new or additional risk factors, in which case you will receive a notification immediately. Finally, CDD On Demand offers the possibility to try to find out the UBO behind an authority or organization. At the end of the check you will receive a certified report for your own records.

Better safe than sorry!

 

Yes-co partners with SCOPE FinTech Solutions

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Yes-co partners with SCOPE FinTech Solutions

Reading time: 2 min.

As of September 1st, 2020, Yes-co and SCOPE FinTech Solutions teamed up to integrate the CDD On Demand platform in Yes-co's software for brokers. With this, Yes-co becomes the first supplier to offer brokers an integrated solution for compliance with AMLD and Sanctions Act.

 

Easily comply with the AMLD and Sanctions Act

Like the other so-called gatekeepers, estate agents also have obligations to follow the guidelines the AMLD and Sanctions Act. By entering into the partnership and realizing an integrated solution, Yes-co can expand its software with a new module that helps customers comply with the obligations of the AMLD and Sanctions Act. This offers customers the advantage that they can use their trusted Yes-co software in a very user-friendly way:

  • Being able to enter and / or update relationship data based on current Chamber of Commerce data
  • Being able to screen and check clients in the context of the AMLD and Sanctions Act and archive the result in the form of a certified PDF document in the client administration
  • Be able to conduct UBO research for business clients including underlying Chamber of Commerce extracts, resulting in a certified UBO research report in which the results are presented.

Based on its focus and specialism, SCOPE Fintech Solutions ensures continuous improvement of the delivered product, the development of new product components and features, the monitoring of laws and regulations and the implementation of necessary adjustments, so that Yes-co can focus on the core of its own software for brokers.

Broad collaboration

In addition to integrating software components, Yes-co and SCOPE Fintech Solutions will also work closely together to inform and support customers in the implementation and use of the software. Various offices in the market have indicated that they are very interested in the new module, but a lot of awareness and explanation will still have to be done within the entire market segment regarding compliance with the Wwft and Sanctions Act and what this entails. Yes-co and SCOPE will start a campaign for this after the technical integration of the software is ready and the module is available for customers via the Yes-co Appstore.

Are you a broker and are you interested in this new solution or would you like to use it, stay informed by placing yourself on the Wwft watchlist, then Yes-co will contact you when the product is available.

 

Customer Due Diligence (CDD) in ten steps - step 6

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CDD in 10 steps

Step 6: Risk Assessment

Reading time: 2 min.

After you have taken the previous steps, which include identifying and verifying client credentials, finding out the UBO, and checking the client risks, you are obliged to make an overall risk assessment. Based on this risk assessment you will then determine whether you want (and may) enter a business relationship with this client, or if additional client research is needed.

The risk assessment

To arrive at the right risk assessment, it is important to check whether the ultimate goals of the client make sense with their profile. To assess the risk associated with a client, there are several points to keep in mind:

  • Country of origin and residence
  • Clients and delivery channels
  • Products, services and transactions
  • Employees and the internal culture
  • Third parties

Next, you should make a risk analysis in which you determine the likelihood of a risk, and its potential impact in terms of potential cost or damages.

Risk categories

Risk is commonly distinguished with four categories: low risk, normal risk, high risk In case of unacceptable risks, you may not enter a business relationship with this client, and you will be required to end the business relationship at the next opportunity.

Some examples of low risk transactions are standard services for individuals, pension products, and standard services for small-scale commercial relationships.

Examples of normal risk levels are bank accounts, routine international payments for medium and large enterprises, and routine services and products related to private banking. In these cases, the frequency for review can be as low as two to three years.

The high-risk category includes banking products and services which involve an increased risk (such as large cash deposits), or when your client is politically exposed.

In conclusion

Once you have assessed the risk of a client, you should decide whether you want to enter a business relationship with this client. When you are in a business relationship, you will need to monitor your clients against active Sanction Lists on a daily basis. More on this in the following blog: monitor the risk profile of the client!

The ease of use of CDD On Demand according to RE/MAX

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The ease of use of CDD On Demand according to RE/MAX Haarlemmermeer

Reading time: 2 min.

RE/MAX "the Makelaars van de Haarlemmermeer" have been using CDD On Demand for several months to their satisfaction for screening, checking and monitoring their customers in the context of the AMLD and Sanctions Act. 

RE/MAX had been looking for a solution for checking their customers for some time and given the irregular influx of customers within the brokerage, CDD On Demand was the perfect solution. By means of the simple credit system and no additional subscription costs, they are only obliged to use credits in case of a new customer. This saves a lot of monthly costs and offers the flexibility they were looking for. 

Dennis de Haan: “As brokers we are obliged to check all parties with which we do business according to the AMLD. After we tested a number of providers, we eventually started doing business with SCOPE FinTech Solutions. The CDD On Demand tool works quickly, simply and efficiently. The report that the system generates is professional, clear, well-organized and meets the requirements set for us as brokers; In addition, we are not bound by contracts and it is an accessible way to generate the correct information. We are very satisfied! 

Try it yourself and request here for your own AMLD client research 

023-2100700
demakelaarsvan@remax.nl
www.makelaars-in-haarlemmermeer.nt

Customer Due Diligence (CDD) in ten steps - step 5

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CDD in 10 steps

Step 5: Determine client-related risks

Reading time: 2 min.

Short

After you have determined that the Wwft applies to you, you have identified your client and verified these credentials, and in the case of a legal entity the possible UBO has been determined , you should assess any potential risks associated with a business relation with the client. In this step you need to check, among other things, whether your client is a Politically Exposed Person (PEP).

 

One of the ways to estimate a client's risk is to see if a client is a PEP. (Politically Exposed Person)

 

Politically Exposed Person (PEP)

One of the first steps you take to assess client risk is to check whether your client, or a member of his immediate family, is considered as being politically exposed. A politically exposed person is someone who currently is employed in a political function or has held such a position up to one year ago

Investigating whether your client is considered as a PEP is important because a PEP carries a higher risk of corruption due to his, or her, profession. Even if your client is related to a PEP, this risk is considered to be increased as the client is in the direct social circles of the PEP. In the event that the client is a PEP, you are obliged to conduct an enhanced client research, the requirements for the enhanced client research vary depending on the field of work of the provided service.

Additional checkups

In addition to investigating whether your client is on a PEP list, it is also wise to check if your client has had negative media coverage or is under the supervision of a financial regulatory body. The Sanctions Act also requires you to check whether there are active, or historical, sanctions enacted against the client. It is also necessary to check whether the client appears in the insolvency register. If any of these conditions is the case, a business relationship with this client can cause reputational damage.

In conclusion

Once you have determined the client-related risks, you should draw up a risk assessment of your business relationship with this client. More on this in the following blog – Determine the risk assessment.