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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.