Client investigations and court records

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 Wwft are obliged to carry out an extensive client screening for both new and existing clients before they can do business with them. 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 Wwft 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 for client investigations, but accessing this information 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 Wwft regulations:

• Whether a client appears in a Wwft-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.