Introduction of the Centra Insolvency Register in the SCOPE CDD On Demand solution
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Recently, a new functionality was added to the SCOPE CDD On Demand solution, which now also provides insight into the data of the Central Insolvency Register of the Judiciary. By means of this register, CDD On Demand requests information about, among other things, bankruptcies and debt restructuring as part of the compliance check. Elements that are important in a concrete customer due diligence that help to prevent abuse.
There are three types of insolvency regulations in Belgium and the Netherlands: bankruptcy, suspension of payments and the Debt Restructuring of Natural Persons Act.
The Central Insolvency register
Insolvency is the most comprehensive definition to describe the financial insolvency of a private individual or company. In the Netherlands and Belgium there are three different types of insolvency regimes:
- Bankruptcy Legal entities as well as natural persons (private individuals) and natural persons with a company (including self-employed persons, partners of a VOF or managing partners of a limited partnership) can go bankrupt. When bankruptcy occurs, the court appoints a trustee. The trustee manages and sells the assets of the bankrupt contents. The trustee is investigating what is possible to pay out to the creditors.
- Suspension of payment: Suspension of payment implies "suspension of payment" and is aimed at the continued existence of a company. For a moratorium of payments, there must be temporary financial problems that can be solved in the short term. If it turns out that the financial problems are not temporary and the company can no longer structurally pay its bills, a bankruptcy usually follows.
- Natural Persons Debt Management Act: When a natural person has debts and it is not possible to pay off debts, it is possible to obtain debt assistance through the municipality. The municipality then tries to reach an arrangement with the creditors. If the natural person cannot repay anything or if the creditors want more than can be paid back, debt management can be asked for help under certain conditions through the court.
A Central Insolvency Register of the Judiciary is available in the Netherlands. This contains all insolvency data published (digitally) after 1 June 2005. The Central Insolvency Register is a public register of bankruptcies, moratoriums of payments and debt rescheduling which is ordered available by the Judiciary. This register contains insolvency details of trade names, natural and legal persons. If a (legal) person you are looking for is not listed in the register, it is possible that the statement of the insolvency has not yet been published or that the relevant (legal) person is not in a state of insolvency. The insolvency data is available up to six months after the end of the insolvency.
Insolvency and customer due diligence
Customer due diligence is a crucial step in most activities in the financial and peripheral sectors. These investigations are legally required by, among other things, the Sanctions Act and the Money Laundering and Financing Terrorism Act (Wwft), whereby the investigation may also be required in relation to business relations. This research examines the financial situation and history of a client or relationship in order to combat the risk of economic crimes such as money laundering. It is also important here whether the client or relation has been involved in a bankruptcy, debt restructuring, or suspension of payments. Institutions subject to the Wwft have been given a Gatekeeper position. If fraudulent practices are suspected, it is mandatory to report this to FIU-the Netherlands.
A complete customer due diligence is guaranteed by consulting the Central Insolvency Register.
Consultation of the Central Insolvency Register
Via CDD On Demand In the CDD On Demand solution, the Central Insolvency Register is automatically consulted, in addition to the other checks associated with an extensive customer due diligence. The latest version of CDD On Demand independently checks the insolvency register if you have found the right client or relation in the database. As soon as you click on this person, the following points will be checked:
- Central insolvency register
- Whether a board ban has been imposed on a person or whether a company has a director with a board ban
- Whether a person is a tax resident or a company located in one of the risk countries according to the FATF
- Sanction lists, both historical and current sanctions.
- Adverse media
- PEP lists
- Whether a person or company is under tutelage of financial regulators
- Whether a person or company has dealt with law enforcement agencies
In short, a complete and extensive customer due diligence according to the guidelines of the Wwft. You can then download a certified report free of charge to demonstrate that you have complied with the legal obligations of performing a customer due diligence. In addition to extensive customer due diligence, the CDD On Demand solution also supports finding the ultimate beneficial owner(s) of an organization (only for Dutch companies) CDD On Demand also offers the option of placing certain searches on a so-called watch list where your clients are checked daily for changes in the points of control. If a change occurs, you will automatically receive an email and you can adjust your risk assessment if necessary. Beter to be safe than sorry!