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Update Act plan of action to prevent money laundering

03 December 2019
Banking law & finance - Notarial practice - Corporate Law

On 2 December 2019, the legislative proposal “Plan of action money laundering” (the “Proposal”) has been published for consultation. The deadline of this consultation is 14 January 2020. The Proposal will amend the Dutch Money Laundering and Terrorist Financing Prevention Act (Wet ter voorkoming van witwassen en financieren van terrorisme) (the “Wwft”) and the Dutch Economic Offenses Act (Wet economische delicten) (the “WED”). In this update, we will discuss the measures introduced by the Proposal and the background thereof.

Prohibition of cash payments over EUR 3,000

The first measure introduced by the Proposal is the prohibition of cash payments over EUR 3,000 for professional traders of goods (handelaren in goederen). This prohibition does not apply to private persons. Based on the Proposal, non-compliance with this prohibition will qualify as a criminal act under the WED.

The Fourth anti-money laundering Directive (Directive (EU) 2015/849) provides that EU Member States can adopt stricter rules regarding the use of cash. The introduction of this prohibition is consistent with other prohibitions which were introduced by other EU Member States. In addition, the Dutch legislator is of the opinion that this prohibition will not unnecessarily hinder cash payments and that it will complicate money laundering of criminal money.

Improvement of the exchange of information

The second and third measure of the Proposal both see to the improvement of the exchange of information between Wwft-institutions for the purpose of their gate-keeping function (poortwachtersfunctie). Such institutions are indispensable for the prevention of money laundering and terrorist financing because – to a certain extent – they decide who will be granted access to the financial system and they have a duty to report unusual transactions in this respect with the Dutch Financial Intelligence Unit.

One of the measures enables the Wwft-institutions with a legal duty to monitor transactions (e.g. banks) to exchange information with each other more easily. The other measure enables Wwft-institutions to exchange information with each other if their clients show signs of integrity risks. If Wwft-institutions have more information available, they can assess the risks of money laundering and terrorist financing better, faster and, therefore, more effective.

The Proposal introduces the following new legal grounds to improve the exchange of information:

  • an obligation to consult with the client’s previous service provider(s) (from the same category of Wwft-institutions) regarding possible integrity risks in the event of a strict client investigation;
  • found integrity risks with clients with a high risk of money laundering or terrorist financing can be exchanged between Wwft-institutions;
  • the monitoring of transactions can be outsourced to third parties; and
  • transactions can be shared between Wwft-institution (but not the reporting of unusual transactions).

Based on the Proposal, non-compliance with the obligation to consult with the client’s previous service provider(s) regarding possible integrity risks will qualify as a criminal act under the WED.

How will this affect you?

The Proposal will – amongst others – affect current KYC (know your customer)-procedures of Wwft-institutions. The above will have to be implemented in such KYC-procedures accordingly in order to enable employees to conduct their work in an adequate manner. When implementing the above, the privacy of the clients will have to be guaranteed accordingly.

Market parties can react to the Proposal until 14 January 2020.

Please do not hesitate to contact our Banking & Finance team if you have any further questions regarding the consequences of the Proposal for you.