CDD On Demand

shutterstock_529081138

Update 2021: Brokers and the obligations imposed by the AMLD

Reading time: 3 min.

In short

The Wet ter voorkoming van witwassen en financieren van terrorisme (hierna: Wwft) is in het leven geroepen om te voorkomen dat het Europese financiƫle stelsel gebruikt wordt voor het witwassen van geld en de financiering van terrorisme. De richtlijnen van de Wwft verplichten verschillende branches binnen de financiƫle dienstverlening om hun klanten te identificeren, de afkomst van hun geld te achterhalen en om ongebruikelijke transacties te melden. Bovendien moeten zij een vereenvoudigd, standaard of verscherpt cliƫntenonderzoek uitvoeren.

In this blog you can read more about six questions about compliance with the guidelines under the AMLD for brokers.

What are the most important changes to the AMLD since its introduction?

The AMLD came into effect on 1 August 2008 and is also referred to as the third anti-money laundering directive, because the AMLD is a combination of the Identification of Services Act (Wid) and the Disclosure of Unusual Transactions Act (Wet MOT).

The Dutch governement implemented the 4th Anti-Money Laundering Directive on 25 July 2018. The fourth anti-money laundering directive obliges all EU member states to keep a UBO register, which means that companies are obliged to register their ultimate owners and / or the persons who have control in the UBO register. The Dutch UBO register is included in the Trade Register of the Chamber of Commerce.

The most recent anti-money laundering directive was introduced in the AMLD on 21 May 2020. A few pertinent changes to the latest anti-money laundering directive include:

  • Virtual currencies are also covered by the AMLD: Two new institutions became subject to the Wwft with the introduction of the fifth anti-money laundering directive. Crypto exchange platforms and crypto custody wallets must now comply with the AMLD. Owners of crypto currency ATM machines also fall under the AMLD.
  • The objective indicator of third high-risk countries will lapse: the fourth anti-money laundering directive included an objective indicator for high-risk third countries and all transactions had to be reported to FIU-the Netherlands. This objective indicator has disappeared because it would create too much work. A subjective factor has replaced this. So it now depends on the nature of the transaction.Ā 
  • Risk assessment becomes the guideline: Institutions subject to the AMLD must make a risk assessment before conducting a customer due diligence. Before entering into a business relationship, companies must make a risk assessment of a client and, on that basis, opt for a simplified, standard or enhanced client due diligence.

How do brokers have to deal with the AMLD?

Brokers who mediate in the purchase and sale of real estate are obliged according to the guidelines of the AMLD to perform a gatekeeper function and duty to report.

The gatekeeper function means that they make a risk assessment and, on the basis of this, perform an appropriate customer due diligence. This is usually a standard customer due diligence. This requires brokers to identify and verify all of their clients. It is also important for the reporting obligation to check whether your client is himself or family of a PEP (Politically Exposed Person).

If a broker wants to do a deal with a business, the broker is also obliged to map out the entire company structure and find out who the (Ultimate Beneficial Owners) UBOs are. In addition to identifying and verifying, brokers must map where the UBOs live and where the company is located.

If there is a higher risk of money laundering or terrorist financing, the institution will conduct more stringent customer due diligence.

Brokers and other companies subject to the AMLD provide the best protection against possible fines from regulators by means of stricter customer due diligence.

 

How does a broker comply with the notification requirement?

When a broker suspects an unusual transaction, the broker is obliged to make a report to the Financial Intelligence Unit Netherlands (FIU-Netherlands). It is also mandatory to report refused customers on the basis of the Wwft to report them to FIU-the Netherlands. If this is the case, the broker must also inform FIU-the Netherlands on the basis of which criteria the customer was refused.

Estate agents assess whether something is an unusual transaction on the basis of objective and subjective factors drawn up by FIU-the Netherlands.

Objective factors:

  • A cash transaction of an amount of ā‚¬ 10,000 or more. This can be paid to or through the institution in cash, with bearer checks, a prepaid payment instrument (prepaid card) or similar means of payment.
  • A transaction that is suspected to be related to money laundering or terrorist financing and which is reported to the Public Prosecution Service, must of course also be reported to the FIU.

Subjective factors:

  • A transaction where the institution has reason to believe that it may be related to money laundering or terrorist financing.

For a correct subjective assessment of transactions with persons or countries that entail an increased risk, FIU-the Netherlands refers you to the risk countries as designated by the CIE.

An example:

A potential customer wants to work with a real estate agent. Before the broker can actually get started with a potential customer, the broker is obliged to perform an identification and verification. The results make it clear that the potential customer is a close or relative of Politically Exposed Person (PEP). A stricter customer due diligence should be carried out on the basis of this risk indicator. With this, the broker fulfills his gatekeeper position. However, in order to comply with the notification requirement, a notification must also be made to FIU-the Netherlands. The broker is obliged to make a notification on the basis of a subjective indicator.

Which problem does SCOPE FinTech Solutions solve with the CDD On Demand solution?

The CDD On Demand solution from SCOPE FinTech Solutions is a solution that supports you in performing an extensive and traceable CDD check. With the help of SCOPE CDD On Demand you can screen your clients in a very simple and fast way. SCOPE CDD On Demand checks for the following points:

  • Politically exposed persons (PEP)
  • Law enforcement
  • Financial supervisors
  • Disqualified Director
  • Insolvency reports (International media)
  • Central Insolvency Register (Netherlands)
  • Current- and previous sanctions
  • Trustee and administration register (Netherlands)
  • Geographical risk
  • Adverse media

Wil u weten hoe de oplossing van SCOPE FinTech Solutions werkt? Wacht dan niet langer en neem een proefaccount. U ontvangt direct 2 gratis credits, waarmee u gelijk uw cliƫnten kan onderzoeken. Dek uw bedrijf in tegen boetes van financiƫle toezichthouders.

Better be safe than sorry!