Rechtszaakregisters bij het clientenonderzoek

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Client investigations and court records

Reading time: 4 min

Short

The Money Laundering and Terrorist Financing Prevention Act (Wwft) was introduced in the Netherlands in 2008 with the aim of deploying working groups close to the financial market, such as notaries and accountants, to combat criminal practices. Professional groups that fall under the AMLD are obliged to carry out an extensive client screening for both new clients and existing clients. before they can do business with it. An important pillar of this investigation rests on access to lawsuit records, which is easier said than done.

Customer due diligence

The exact requirements of the customer due diligence vary by service offered, but the overall purpose and process are the same. The main purpose of customer due diligence is to investigate a customer and the origin of financial resources involved in a transaction. The first step in this process includes confirming a client's identity, and verifying supplied identification information. For legal entities, it is also necessary to find out who the ultimate beneficial owner (UBO) behind an authority is, and to carry out the same research on them

After confirming the identity, it is necessary to assess the risk profile of a client, this profile estimates the level of risk that the business relationship or transaction can be used for clandestine activities. If the risk profile is estimated to be high, it is necessary under the AMLD to carry out a more thorough investigation, or in the worst case to terminate the business relationship. The risk profile is estimated on the basis of certain risk factors, such as the nature and origin of a client and or his capital. An important risk factor is also the mention of clients, or stakeholders, in certain court records. If this is the case, a thorough investigation is immediately mandatory.

Court records

Since 2014, the Dutch judiciary has kept records of all court cases and rulings which are publicly accessible through the website of Rechtspraak. When carrying out a client investigation, the most important records include the insolvency and receivership records. The presence of a client or stakeholder on one of these records is associated with a very high-risk profile for the risk assessment.

Using court records during the client's investigation

The court records contain information which is essential to research during client investigations, but doing so is easier said than done. While the records are publicly accessible, they are fragmented, and multiple search prompts will be required per client. In addition to the documentation, which is required during this process, screening large customer bases against these records may require quite some time investment.

In addition to screening new clients the high-risk association makes it necessary to regularly re-screen existing customer files and business relationships against these registers. Under the AMLD the service provider has the responsibility to screen its clients and business relationships against up-to-date registers. Failure to comply with this duty can lead to hefty fines or penalties.

CDD On Demand

SCOPE FinTech Solutions has developed Scope CDD On Demand to assist AMLD-liable parties with client investigations for small and medium-sized customer files. SCOPE CCD On Demand is a user-friendly external tool for client research that can be easily integrated with an existing customer base. CDD On Demand allows for the easy screening of single client, or an entire customer base, against risk factors in accordance with current AMLD regulations:

  • Whether a client appears in a AMLD-relevant legal register, such as the insolvency register
  • Whether a client has been declared incompetent as director
  • Whether your client is found in lists of law enforcement agencies
  • Whether there is negative publicity about a client
  • Whether a client is considered a Politically Prominent Person (PEP)
  • Whether sanctions have been (or were) taken against the client
  • Whether a client is supervised by a financial regulatory authority

After doing a client screening, CDD On Demand provides you with a certified report that is in line with the requirements of the Retention Obligation of the Wwft. It is a tool which saves time both on client screening and creating the necessary documentation. Through the monitoring function it is easy to periodically screen existing customer files against these points, doing so you will only be notified of important changes.

Strict money laundering regulations hinder companies and charities

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Strict money laundering regulations hinder companies and charities

Reading time: 4 min

Short

In de strijd tegen frauduleuze witwaspraktijken vallen steeds vaker onnodige slachtoffers. Goede doelen, coffeeshops en zelfs betaald voetbalclubs hebben last van de aangescherpte reglementen rondom witwassen. Sinds de monsterboete die de ING in 2018 heeft gekregen zijn banken voorzichter dan ooit en dreigen eerlijke bedrijven en goede doelen slachtoffer te worden van het nieuwe, aangescherpte interne beleid van de banken.


Several companies from high-risk branches and NGOs that do business with high-risk countries have difficulties in obtaining financing or opening a bank account due to the strict anti-money laundering policies of banks


Hinder when applying for a bank account, financing or registering with a payment platform

For NGOs active in high-risk or sanctioned countries, it is very difficult to find a bank or to join a payment platform such as Mollie. They are asked to provide the necessary documents themselves, but for many smaller NGOs this often costs too much time and also a lot of money. The Dutch Banking Association recognizes this problem and says it is in discussion with the sector (source). What often arises at banks are the activities that - mainly smaller - NGOs finance and with whom they collaborate.

Not only NGOs are complaining about the anti-money laundering policy. Complaints are being made from various sectors about the obstacles, for example when opening a bank account or applying for financing. If it is stated that companies are hindered by the anti-money laundering rules, then it is probably more likely to think of classic fraud-sensitive companies such as legal weed shops in the Netherlands and trust offices. In addition to these examples, professional football clubs and companies that conduct international trade also report problems. Banks hardly dare to take any risk when taking on new clients who trade with, for example, risk countries or are active in a risk sector and they direct them to the door in advance. The due diligence investigation then takes too much effort and is not worth the risks.

Banks also apply different criteria. The anti-money laundering policy has thus become a complicated hassle of rules for both affected companies and the bank itself. Government policy is clear; strict guidelines against money laundering. But does this policy, when implemented in this way, not unlawfully hinder honest companies and charities? It should not be the case that bona fide companies and organizations operating in a risk area or industry do not receive a bank account or financing due to the strict anti-money laundering policy.


The relationship between banks and regulators has been sharpened since ING's monster fine. As a result, banks no longer dare to take risks at all.


The anti-money laundering policy under the AMLD

The anti-money laundering scheme is part of the AMLD, the Money Laundering and Terrorist Financing Prevention Act. The AMLD has gradually been tightened, but has never before caused as much nuisance as in the current reality. Due to a reign of terror by the Public Prosecution Service that resulted in at least one historically high fine for ING and an ongoing investigation at ABN AMRO, the relationships have been sharpened. Banks dare to take even less risk than before.

As a result of the AMLD, banks, like other institutions subject to the AMLD, have been given a so-called gatekeeper function by the government for the protection of our legal order. They are the first line in the fight against money laundering. By means of extensive customer due diligence investigations, also known as the AMLD customer investigations, they must be the first party to detect fraudulent practices and suspicious actions. A thorough AMLD customer due diligence takes a lot of time, given the large number of (sanction) lists that they have to go through to check a person or company.


The CDD On Demand solution enables you to perform a cheap AMLD customer due diligence within seconds

 

Time and cost savings by using CDD On Demand for your customer due diligence

CDD On Demand was created on the basis of this issue. Automation in the field of financial regulations regarding the Wwft was offered sparingly and was often incomplete. The CDD On Demand solution was developed based on the idea that it could all be better, cheaper and easier. The compliance check included in the solution, checks a company or person on eleven different (sanction) lists, both mandatory lists and non-mandatory lists. At the end of the compliance check, you will receive a certified report for your records, which in turn serves as proof that you have performed the compliance check in good faith. One compliance check only takes a few seconds and costs a maximum of € 1.50. The CDD On Demand API has also been developed for larger companies, which means that costs are even lower.

The monitor function

After the extensive compliance check, it is also the intention that you keep your data up-to-date. By the monitoring function of the CDD On Demand solution your system is always up-to-date without having to make any effort yourself. You only need to take action if something has changed in the situation of one or more clients, for example if your client is elected as a member of the States General in the upcoming election and he / she has now become a politically exposed person. The CDD On Demand solution then issues a notification that one or more of your clients has been found on one of the checked (sanction) lists. The monitor function runs the lists daily for all persons on the monitor list.

In this way, checking clients to comply with the Wwft becomes less time and money consuming. In addition, the risk of a fine from competent authorities is significantly reduced by demonstrating that you have complied with the Wwft as far as possible. The CDD On Demand solution is available for SMEs with a Wwft obligation, but also for large accounts with a Wwft obligation. You can at any time contact us about the possibilities for your company or request a free demo account..

Financial Action Task Force (FATF)

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The Financial Action Task Force

Reading time: 3 min.

The FATF was founded in Paris in 1989 on the initiative of the former G7. The FATF is meant to combat the misuse of financial systems for money laundering. In addition to its focus on combating money laundering and terrorist financing, the FATF is also shifting its focus towards current and new forms of financial and economic crime, including the risks related to cryptocurrency. The main tasks of the FATF include periodically reviewing FATF recommendations, improving compliance with FATF recommendations, identifying non-cooperative or high-risk countries, and following trends in criminal activity.

Review of recommendations

The FATF recommendations are the internationally widely accepted standards for combating money laundering and terrorist financing. Initially, the FATF's aim was to facilitate international cooperation in the fight against money laundering as a result of drug crime. The immediate emphasis was placed on a Customer Due Diligence policy and the appointment of a responsible individual for following Due Diligence protocol: the compliance officer. At the heart of the FATF's recommendations are:

  • Adequate criminalization of money laundering and terrorist financing
  • The assurance of good administration of KYC and CDD
  • A whistleblower system for reporting unusual and suspicious transactions
  • Supervision and enforcement of applicable laws and regulations
  • International cooperation in the fight against money laundering and terrorist financing

Improving recommendations

To improve recommendations, the FATF uses two methods. The first method is a country check, during this audit a country is visited, and various points of its financial security measures are assessed. The countries are then tested against a list of standards and the conclusions of the audits are published. The FATF country list is based on this assessment.

This list includes countries with which the FATF is cooperating to improve the fight against money laundering and terrorist financing. Other countries should consider these countries as high-risk countries. The second method is a self-examination, carried out by the countries themselves. In this self-examination countries are asked to complete a questionnaire, which will provide insight into compliance with FATF recommendations by country.

Identification of high-risk countries

To identify countries which are not willing to cooperate, or high-risk countries, the FATF-recommendations are binding to evaluate their legislation and anti-laundering policies. Countries which do not cooperate with FATF investigations risk being classified as high-risk countries. At present, the following countries have been identified as high-risk countries which have made a written political commitment to address the identified shortcomings. Together with the FATF, an action plan has been developed for these countries: Afghanistan, Iraq, Syria, Uganda, Vanuatu, Yemen, Trinidad and Tobago and Pakistan.

Iran made a high-level political commitment in response to the FATF “Public Statement’’ (identified third-world countries with high risk level) to address the identified shortcomings and decided to request technical assistance for the implementation of a FATF action plan. The Democratic People’s Republic of Korea (DPRK) has been identified as a high risk with continued high risk of money laundering and terrorist financing, and it has repeatedly failed to address the identified shortcomings.

 

Following trends

The FATF’s final core task is to follow trends and techniques used in the field of money laundering and terrorist financing, and to publish directives to combat these. The FATF does this by analyzing the current practice of money laundering, to reveal trends, methods, and techniques used by criminals. 

 

Conclusion

The FATF is an internationally recognised institution with the aim of combating money laundering and terrorist financing. The FATF recommendations are a global standard for preventing money laundering and terrorist financing in order to protect the financial system from abuse by criminals, money launderers, and terrorists. Member countries must ensure that adequate anti-money laundering laws and regulations are introduced.

The FATF has a list of countries which do not yet comply with the standards regarding the existence and enforcement of adequate laws and regulations. Within this list, there is a distinction between countries which have indicated aversion to introducing these laws, and those which simply do not comply at the present. When a country has indicated its intention to improve on its shortcomings, the FATF works together with this country to ensure that proper laws and regulations are put in order.

Dirty money, terrorist money & criminal money

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Dirty money, terrorist money & criminal money

Reading time: 2 min.

When money laundering is discussed different terms for money are often discussed, such as dirty money, terrorist money, and criminal money. This blog will discuss the difference between these money flows and the different consequences associated with these kinds of money.

 

Dirty money

Dirty money is usually earned legally, but it is not declared to the tax authorities. This means that tax has not been paid on it. The taxable person did not declare these flows of money as income from labour, investments, or for example income from rental property. Owning or dealing with dirty money is considered to be a criminal offence. Its existence means that someone didn't truthfully fill out and sign his or her tax returns. Despite the act of dirtying money being considered criminal, it should not be confused with criminal money. The latter solely originates from criminal activities whereas this is not the case with dirty money, which is acquired through legal channels. Legally, having dirty money is considered as a basic offence under money laundering. Wwft-liable institutions may not advise clients to set up constructions to evade tax. This is set in stone in the codes of conduct of the relevant institutions. If an adviser does give such advice, or personally gets involved, there is a chance that the Wwft-liable institution will lose its licence and is therefore no longer allowed to perform its services.
 

 

Terrorist money

Terrorist money is money used to finance terrorist activities. Since the 9/11 attacks in the United States, terrorist financing has become a much more important issue after many people have experienced the impact of it. It has become an important social issue after more terrorist attacks happened since then. Some examples are the Madrid attacks in 2004, the murder of Theo van Gogh in 2004, the London bombings in 2005, and the Boston Marathon bombing in 2013. Terrorists need a lot of money to carry out terrorist activities, such as to carry out attacks and to cover the cost of involved weapons and materials. The financing of terrorism is punishable by Article 421 of the Penal Code.

 

Criminal money

Criminal money is money which is earned by committing a crime, and it is thus considered as part of the illegal economy. The practice of money laundering is used to introduce these funds to the legal economy, this is done in several steps. The first step is placement, here the illegal funds are introduced into a legal economy. The second step is to obscure the origin of the money, for example by producing counterfeit bills of service or clients. In the third step the money is associated with a legal source of income, and finally it is invested by the criminal into a fully legal endeavor in the integration step.

 

Similarities and differences

The difference between terrorist money and criminal money is that terrorist money is used to finance terrorism, while criminal money will be laundered to invest in the legal economy. Criminal money is always earned in the criminal world, while terrorist money can also be legally earned and is not required to cover large sums. There are also similarities between criminal money and terror money. Financing terrorist attacks can also take place with criminal money, and for terrorist money it is important to obscure the origin of the funds as well. If the origin can be traced this could expose the involved terrorist groups.

 

International

Dirty money, terrorist money, and criminal money are all international phenomena. It is therefore important that countries work together to tackle these money flows and ensure that the perpetrators are caught. Some of the characteristics of dirty money, terrorist money, and criminal money flows are that they require large international networks of companies of which the internal structure is obfuscated. These networks are intertwined with the legal economy, often through the real estate investment with falsified documents to legitimize the turnover in bank accounts.
 
 

 

CDD On Demand

CDD On Demand can help you track down crimes of dirty money, terror money and criminal money. For example, during a compliance check, a geographical risk is considered, because certain countries are more likely to be involved in such activities than others.
 
It also looks at whether your clients appear on a Sanctions List and have therefore been involved in such a crime before.Curious what CDD On Demand can do for you? Request your trial account today and try it for yourself! Better be safe than sorry!

The fight against money laundering

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The fight against money laundering

Reading time: 2 min.

Financial institutions and different professional groups need to be aware of different types of financial crime on a daily basis. Perhaps one of the main types of financial crime is money laundering. Money laundering means that the money earned in the criminal circuit is given a legal status in the upper world. For this, extensive use is made of financial institutions and certain professional groups. The institutions that participate in this often do this unconsciously.

 

What are the risks?

Financial institutions obviously do not want to get involved in a money laundering scandal. This can have various consequences, including damage to reputation and even the surrender of the license as a result of which (certain) service activities may no longer be performed. Various laws and regulations are in place to limit the risk that companies (unknowingly) cooperate with money laundering. The Wwft is one of the best known in the field of money laundering.

The history of anti-money laundering regulations

In the 1980s, the then G7 countries decided to jointly combat money laundering. The Financial Action Task Force on Money Laundering (FATF) was established. When the Task Force officially came into effect, various EU countries - including the Netherlands - joined. This resulted in the first European Anti-Money Laundering Directive in 1991, which was based on recommendations from the FATF. The first Dutch legislation was subsequently introduced in 1994.

Since the terrorist attacks in New York on September 11, 2001, the FATF has also focused on terrorist financing. The similarity between money laundering (criminal money) and terrorist financing (terrorist money) is that often the same methods and channels are used. This resulted in the Wwft, the Money Laundering and Terrorist Financing Prevention Act.

Regulations in the Netherlands

There are various laws and regulations in the Netherlands for combating money laundering:

    • Anti Moneylaundering Directive (AMLD)
    • Financial Supervision Act
    • Sanction law 1977
    • Supervision of Trust Offices Act
    • Economic Offenses Act

Enforcement chain

There are various authorities involved in the enforcement of the various laws and regulations. The enforcement chain is also described as follows:

  1. A transaction is being made by someone who wants to launder money
  2. The reporting institution reports an unusual transaction
  3. FUI Nederland will assess the transaction and if it is considered suspicious, a report will be sent via the FUI
  4. The investigative service assesses whether there is a criminal offense
  5. The prosecution prosecutes the offense or dismisses the case
  6. The judge determines whether the offense has been committed and which sanctions, if any, are attached to it

By definition, how much money is laundered annually cannot be measured. After all, then the money laundering practices would have come to light and the perpetrators would have been punished. It is estimated that thirteen billion euros worth of criminal money is laundered in the Netherlands every year. About five billion euros of this money comes from abroad, and eight billion euros is earned in the Netherlands itself through crimes and fraud. On average, between 175 trillion and 1.87 trillion euros are laundered worldwide every year.

In which countries is laundered the most? 

Research shows that the countries where the need for money laundering is greatest, are usually prosperous Western countries. For example, the United States is number one, followed by Germany, the United Kingdom, France and Australia. The Netherlands is in fourteenth place. The attractiveness of countries to money laundering depends on a number of factors such as prosperity, the financial system and political stability. The better the policy is to detect money laundering, the less attractive this makes the country for money laundering.

Conclusion

Much attention has been paid to the fight against money laundering. Over thirty years have passed since the first steps were taken to tackle money laundering, and these measures are still expanding every day. Financial institutions do everything they can to keep money launderers out, for this it is important that employees have the knowledge and skills to be able to combat money laundering.

 
 

The UBO register as an “instrument” against money laundering, counterterrorism and corruption; using sledgehammers to crack nuts!

The UBO register as an “instrument” against money laundering, counterterrorism and corruption; using sledgehammers to crack nuts!

Readig time: 3 min.

Disclaimer: There is no intention to downplay the money laundering or terrorist financing problem, but this article is about the relationship between money laundering and a massive privacy violation of the major shareholders and entrepreneurs; the UBO register.    

What information is available?

When doing research on money laundering, you mainly come across numbers. The total amount that would have been laundered in 2019 amounts to 13 billion euros, of which 5 billion euros comes from abroad (Source: FIOD annual report). Only a limited part of the nature of money laundering can be attributed to natural persons, research shows that money laundering in the Netherlands mainly occurs among drug criminals.

Counterterrorism is an emotionally charged topic and is often discussed in the news. What is not mentioned is that (fortunately) since 2014 the number of terrorist attacks has decreased by 50% and the number of civilian casualties by 54% View the overview of terrorism in 2019 here.

UBO register in the fight against money laundering and terrorist financing

The UBO register tries to combat money laundering and the fight against terrorism, but if such a large part of money laundering can be attributed to drug criminals, the UBO register is therefore especially useful if those drug criminals are registered in the register. The follow-up question is therefore whether drug criminals are listed in a UBO register; most of the people I've talked to about this don't think so. Thousands of honest entrepreneurs who have been working on their company for years, are listed.

Why then a UBO register full of privacy violations, if it is probably pointless concerning combating money laundering and preventing terrorist financing. It is the proverbial using a sledgehammer to crack nuts or a hidden agenda of the state and Europe.

Money laundering

In 2018, an investigation into money laundering was conducted by Utrecht University. Conclusion: The Netherlands has a money laundering problem. In 2014, the amount of money laundering is estimated by the research at 16 billion euros. View the full report here .

More than half of this amount, namely 9.1 billion, dan de helft van dit bedrag namelijk 9,1 miljard comes from abroad. No UBO register is required for this, but suspicious transactions abroad must be monitored for this. This is only possible in the case of cashless money. Cash is getting a bit trickier, but COVID-19 has curtailed cash transactions.   

So the size of the domestic money laundering problem in euros in 2014 was 6.9 billion. More than 90% of this amount comes from drug sales and fraud, according to the aforementioned report. 

For a long time I have searched for the size of the money laundering problem, measured in natural persons. The study by European Money Mule Action 5 (EMMA5) of December 1 provides an indication. In EMMA5, 650 banks, 17 bank associations and the financial investigation services of 31 countries worked together. All this for 3 months. EMMA5 has only resulted in 228 arrests of people who recruited Money Mules. There are not many. 

Actions by our own customers also point to a limited scope of the problem. At one customer 5000 compliance checks resulted in 37 files (0.7% of the file) that needed to be examined more closely. Incidentally, largely false alarm. Another argument to support the ‘using a sledgehammer to crack nuts’-suspicion.

Much is known about money laundering, according to the study. Known Facts:

  1. Using ‘legal’ businesses to launder money. Frequently used money laundering branches are: car dealers, prostitution, massage parlors, taxis and, since COVID-19, also web shops.  Alles zonder inkoop is aantrekkelijk
  2. Reselling (cash paid/ foreign) real estate is attractive for money laundering.
  3. Criminal money is also invested in (existing) companies, often using legal intermediaries.
  4. Geography is also important in money laundering, such as “maintaining relationships with countries of origin of large groups of migrants”. There are also criminal hotspots such as Marbella, Dubai and Marrakesh. The presence of a person on a hotspot possibly indicates a direction.

There are therefore reasons to believe that in the context of money laundering, the Financial Authorities are looking for a group of persons with a criminal background, who are probably not listed in a UBO register. These people cause 90% of the money laundering problem. There are enough leads in the research for more targeted searches.

The UBO register plays no significant role in combating money laundering and given the major violation of the privacy of those involved, the aim does not outweigh the means.   

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.

 

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!