AMLD for accountants
Since the introduction of the Money Laundering and Terrorist Financing Prevention Act (Wwft), accountants and tax advisors have been directly involved in combating money laundering and terrorist financing.
Anti Money Laundering Directive (AMLD)
The AMLD has been drawn up to prevent money laundering and terrorist financing. The AMLD has been in force in the Netherlands since August 1, 2008, and was last amended on January 10, 2020 to the fifth European anti-money laundering directive (AMLD5). Given the work area of accountants, they are closely involved in the AMLD, although it is not always clear what consequences this entails
What does the AMLD mean for accountants?
The main elements of the Wwft are the client due diligence, the reporting obligation and the retention obligation. In short, this means that an accountant must determine who his client is, whether the identification provided is authentic, and whether there is a risk of money laundering or terrorist financing in transactions.
This research is generally referred to as the customer due diligence, and this is a mandatory activity for the purposes of the general guideline AMLD.
Client research and Customer Due Diligence (CDD)
The general guideline of the AMLD recognizes three types of customer due diligence: standard, simplified and enhanced. The simplified research is applicable to a select group of clients such as government agencies, no further research is required.
In all other cases, a standard investigation is first assumed, an enhanced investigation is only required in special cases or if the standard investigation indicates an increased risk.
The first step in standard customer due diligence is to establish and verify the identity of the client and counterparty in a transaction. This means that the auditor must verify whether the documents provided are authentic, whether they are consistent with the parties involved, and whether no external interested parties are involved in the transaction.
The identification data and documents provided must be recorded in a customer file in accordance with the relevant retention obligation of the Wwft. After the implementation of the 4th directive of the European Union, the accountant is also obliged to find out who the Ultimate Beneficial Owner (UBO) is behind every client.
In addition to the investigation into the identity of clients, the Wwft also requires accountants to conduct an investigation into the risk profile. The risk profile is an indication of the risk of money laundering or terrorist financing that clients entail. The FIU (Financial Intelligence Unit) of the national government has drawn up specific guidelines for determining client risk profiles for accountants.
According to this guideline, there is an increased risk for, for example, clients from high-risk countries, or clients who, due to their field, carry a higher risk of money laundering practices. In addition to the nature of the clients, the transaction itself can also involve increased risk, for example in transactions between “shell companies” or transactions with shares whose value cannot be properly determined.
Duty to report
If the accountant's customer due diligence reveals an increased or unacceptable risk of money laundering, he is obliged to report this to the FIU. The duty to report applies to transactions or situations that can be labeled as unusual. After a report
the FIU then decides whether the unusual situation is actually suspicious and acts independently. When submitting a report, an accountant is also obliged to adhere to a stricter retention obligation.
Data retention obligation
The retention obligation obliges an accounting practice to keep all data regarding customer due diligence for at least five years, and to make it accessible for any further investigation. Once a report has been made to the FIU, this obligation also applies, with a stricter requirement for the storage of data. In this case, all data required to reconstruct the transaction, a copy of the notification and a confirmation of receipt from the FIU must also be kept.
Enhanced customer due diligence
As a result of the client investigation, there may be reason to continue an enhanced investigation. This should be done if the initial investigation indicates higher than low risk, but also in special cases. Examples are when involved parties fall under the list of Politically Prominent Persons (PEPs) or have the interest of financial watchdogs.