Points of attention for institutions subjected to AMLD in 2021

At the end of 2020, the Netherlands Authority for the Financial Markets (AFM) published an updated version of the guidelines on the Money Laundering and Terrorist Financing (Prevention) Act (AMLD) and Sanctions Act. For example, they recommended that a continuous sanction screening system be used. They also reported that in the meantime all clients, hired for the change in the law in 2018, must be checked again.

This is not for nothing, last summer the Trouw published an article with Sharon Oded, professor at Erasmus University. She warned us that the Corona pandemic makes 2020 the ideal year for criminals to launder their dirty money.

"Criminals can more easily take their illegally obtained money to the upper world now that companies are busy not to go bankrupt." 

The exact money laundering figures for 2020 are not yet known, but let's be honest, every euro is of course too much. Let 2021 be the year in which institutions take their gatekeeper function seriously. Based on the guideline, we have listed the most important points for attention for you:

Don't be to general with your risk assessments formulation

The risk assessment must clearly show which risk factors played a role in the development of the risk assessment. For each risk factor you state why it is a risk factor and how this influences the risk assessment. For example: you have a client who is a PEP. It is then necessary to describe what a PEP entails and whether this increases or decreases the client's risk. Be as specific as possible.

Appoint someone within the institution who is responsible for compliance with the AMLD and Sanctions Act

Not every institution has the option of assigning someone in a separate compliance function. However, it is important that one of the day-to-day policymakers is designated as the person responsible for compliance with the Wwft and Sanctions Act. Furthermore, an institution is obliged to provide the institution with the implementation of a separate compliance function, insofar as this is proportionate to the nature and size of the institution.

Client due diligence revision

People who have become clients before the AMLD amendment on 25 July 2018 must now be checked again according to the current guidelines. Depending on the risk assessment, it is even expected that a second check has already been carried out. All client files of clients that have been accepted for the amendment of the law with a higher risk must therefore already have been revised.

Reconstruction obligation with regard to identification obligation

Be aware that the personal data of clients must be recorded in a "retrievable" manner. This can be in the form of a written document or online.

Clearly state the purpose and nature of the business relationship

The client file must specifically state the purpose and nature of the business relationship. The AFM is also entitled to request this information. If a business relationship is entered into with a client from abroad, it must be recorded why they want to do business in the Netherlands.

Perform your risk assessment yourself at all times

It is prohibited to outsource client risk assessments to a third party. Outsourcing the monitoring and screening of clients is permitted, however institutions must interpret and describe the "outcomes" themselves.

 

Stricter training requirements

Employees must not only be able to recognize unusual transactions, but also to properly and completely conduct customer due diligence. Where it was previously mandatory to periodically organize Wwft training, it is now mandatory to offer this regularly to the employees within the institution. The information about the offer, the training courses followed, the frequency and the employees who follow training courses must be recorded.

Make sure you have included all sanction lists in your screening

Where the old guideline was limited to the European or Dutch sanction lists, the new guideline indicates that an institution should screen its relations against:

• The National Terrorism Sanctions List
• The EU sanctions list; and
• The UN sanctions list

 

An ongoing sanction screening system

Institutions are already required to periodically monitor clients, depending on the risk assessment. In the latest update of the guideline, the AFM emphasized that it would be even better if continuous monitoring takes place. In any case, it is important that checks are carried out at the following times:

• At the start of the relationship;
• Periodically in case of changes in the relationship (such as the UBO);
• In case of changes to the sanction lists; and
• After the relationship. That is, at the end of the relationship, a final screening must take place.

 

The UBO register

The UBO register, which was opened on September 27, 2020, is only useful if the Ultimate Beneficial Owners of institutions are actually registered here. You still have a little over a year to register. If an institution has not registered the UBOs before March 22, 2022, there are consequences.

With CDD On Demand you are always assured that the correct sanction lists are checked. The monitor function ensures that you receive an immediate notification as soon as something changes for one of your clients on the monitor list.

For just € 1.50 you can screen your client against eleven different (sanction) lists and for € 3.00 the client is monitored for 365 days. compliance check and CDD On Demand monitor function. Better be safe than sorry!