shutterstock_631473233

AMLD for lawyers

Advocaten komen dagelijks al in aanraking met wetten bij het beoefenen van hun vakgebied, en de Wet ter voorkoming witwassen en financiering terrorisme (Wwft) is hier geen uitzondering van. Via deze wet worden advocaten direct betrokken bij de bestrijding van witwaspraktijken en de financiering van terrorisme.

Money Laundering and Terrorist Financing (Prevention) Act

The AMLD has been drawn up to prevent money laundering and terrorist financing. The AMLD has been in force in the Netherlands since 1 August 2008, and was last amended on 10 January 2020 to the fifth European anti-money laundering directive (AMLD5). This law also has a major influence on the field of lawyers, especially how they deal with clients and client due diligence.

What does the AMLD mean for lawyers?

Lawyers have been obliged to conduct a client due diligence since 2003 under the Identification of Services Act and the Disclosure of Unusual Transactions Act, these laws have been replaced with the introduction of the AMLD, which entailed a more extensive set of requirements.

The Wwft does not apply to all activities of a lawyer, only the activities in which they offer advice or assist in tax matters and transactions. The Netherlands Bar Association provides a complete overview in section I-2.

The basic principles of the AMLD are customer due diligence, the notification obligation and the retention obligation. In short, this means that a lawyer must establish who his or her client is, conduct an investigation into the client, and is obliged to report to the Financial Intelligence Unit Netherlands (FIU) if there are suspicious financial situations. or transactions.

Client Due Diligence and Customer Due Diligence (CDD)

During the client due diligence, the lawyer examines his or her client to determine whether there is a risk of money laundering or terrorist financing.

The Wwft applies an open standard to the form of client due diligence for lawyers, but it does determine the results to which the examination should lead. The investigation must be able to verify and validate the identity of the client, and it must lead to an indication of the risk of money laundering or terrorist financing.

Identification of the client

The first step in a regular customer due diligence is to establish and verify the identity of the client and, in the case of a transaction, also of the counterparty. The activities of that process depend on the nature of the client.

For natural persons, the lawyer can rely on the identification documents provided, if these can be verified.

If the client is a legal entity, an investigation must also be conducted into the ownership structure of the client in order to determine who the ultimate beneficial owner (UBO) is.

In addition to verifying the identity of clients and / or establishing stakeholders behind legal entities and companies, the lawyer must also check a number of risk factors.

The results of this first step mainly determine what the follow-up research will look like. The nature of a client often entails a risk profile. Read more about it >

 

Types of customer due diligence

The general guideline of the AMLD recognizes three types of customer due diligence: regular, simplified and stricter. Initially, a regular examination is always assumed, the other forms are only assumed if the identification of the clients indicates low or high risk. 

If there is a high risk due to the nature of the client, a more detailed investigation should be performed. This can occur, for example, if a client is a PEP, or if it has caught the attention of financial regulators. In case of an intensified investigation, more extensive obligations apply to lawyers,

Reporting & Retention Obligation

If a lawyer is employed on a transaction that can be labeled as unusual, he is legally obliged to report this to the FIU. In the case of activities that fall under the Wwft, the advocate is then not obliged to observe secrecy. Even without notification, the FIU can rely on documents that the lawyer must establish under the retention obligation.

The retention obligation means that every law firm must record the activities of the client due diligence in order to demonstrate that it has been carried out. In addition, they must indicate which risks for money laundering and terrorist financing the investigation has pointed out.

Recommended Posts