The Anti Money Laundering Directive is a radical law that has been enforced in the Netherlands since 2008. This law has a major influence on the way in which transactions in tax or real estate may be carried out, and also on the work of parties involved in this. Mistakes in following this law can lead to hefty fines, but how is this actually enforced?

Anti Money Laundering Directive (AMLD)

The AMLD was drawn up to prevent money laundering and terrorist financing. The AMLD has been in force since 1 August 2008 in the Netherlands and was amended on 25 July 2018 according to the fourth European anti-money laundering directive (AMDL4). The core of the AMLD is the involvement of parties that are closely involved in transactions of fiscal resources, such as banks and notaries, to detect money laundering or the financing of terrorism. This is done by so-called customer due diligence, where these parties investigate their customers and the risk of money laundering or terrorist financing they carry.

The executive branche of the AMLD

The executive branch of the AMLD consists of the parties that are obliged by law to comply with the three primary elements of the AMLD: the client investigation, the notification obligation and the retention obligation. The executive branch includes banks, financial enterprises, and persons who act in the context of professional activities that fall under the AMLD, such as brokers or lawyers. See the list of the FIU of The Netherlands for a complete overview of the different branches that are bound by the AMLD. These parties are obliged to conduct customer due diligence, one of the main frameworks of the AMLD. This means that they must conduct extensive research into their clients, the nature of the transactions, and the additional risk of money laundering and terrorist financing in all activities covered by the AMLD.

Enforcement of the AMLD

Enforcement of the AMLD is carried out by several supervisory authorities: the AMLD Supervision Office (tax authorities), De Nederlandse Bank (DNB The Dutch Bank), The Autoriteit Financiële Markten (AFM, the Netherlands Authority for the Financial Markets), en the Dutch Bar Association. Each of these supervisors focuses on a different executive sector under the AMLD. The supervisors check whether the activities of the executive branch comply with the requirements of the AMLD. Under the retention obligation, the executive branch must have written guidelines regarding the AMLD, and a customer due diligence must be documented in such a way as to demonstrate that all requirements of the AMLD have been met. If it appears that an executing party does not comply with the rules of the AMLD, supervisors may issue fines or other sanctions based on the profession.

De Financial Intelligence Unit of the Netherlands

FIU-NL can be seen as part of the executive branch of the AMLD, but its activities are not directly covered by this act. The activities of the FIU are to conduct extensive investigations into money laundering practices or the financing of terrorism. After receiving a report, the FIU conducts an independent investigation to confirm whether a suspicious situation actually exists, relying on the results of the customer due diligence that must be provided under the retention obligation. If there is a suspicious situation, the investigation is then transferred to the appropriate legal authority where it is converted into a criminal investigation, for example.

SCOPE CCD On Demand for the executive branch

The sanctions for insufficient compliance with the requirements of the AMLD can be considerable. It is therefore important that parties under the executive arm protect themselves by ensuring that their research is comprehensive and that they have the correct documentation to demonstrate this. SCOPE FinTech Solutions has developed the SCOPE CDD On Demand solution as a tool within client research (also known as Customer Due Diligence). SCOPE CDD On Demand is an easy-to-use external client survey tool that easily integrates with an existing customer base. CDD On Demand allows users to easily screen clients for the following: SCOPE CDD On Demand is een gebruiksvriendelijk extern hulpmiddel voor het cliëntenonderzoek die gemakkelijk geïntegreerd kan worden met een bestaand klantenbestand. CDD On Demand staat gebruikers toe om eenvoudig cliënten te screenen op de volgende punten:

• If the client is ruled an incompetent director
• Whether your client is found in lists of law enforcement agencies
• If there is any negative publicity found about the client
• If the client is considered a Politically Exposed Person (PEP)
• Whether sanctions are or were in force against this client at any time
• Whether this client is under the supervision of a financial regulatory authority

CDD On Demand can also be used to trace the UBO of an instance (only for Dutch companies). To this end, the system independently analyzes documents available through the Chamber of Commerce and compiles an overview of the persons involved and the identified UBO. In addition, CDD On Demand identifies possible UBOs (UBO suspect) or the person who would know best who the UBO is.

With SCOPE CDD On Demand, you can screen your clients on all these points starting at €1,50, without the obligation to conclude a long-term contract. In addition, at the end of the audit, you will receive a certified report of the audit you carried out that acts as a legally supporting document in case of future verification. The use of SCOPE CDD On Demand provides a fast and automated process for Customer Due Diligence, with UBO control and compliance screening.

Better be safe than sorry!