The issue of money laundering and terrorist financing is high on the social calendar and among regulators (such as DNB and AFM). Various media publications on the facilitation of money laundering by banks, for example, show the impact on the position of directors, on (shareholder) value and on the reputation of institutions involved. Estimates assume a volume of €15 billion to €20 billion a year being laundered in the Netherlands alone. While money laundering is mostly a cross-border activity.
Financial market regulators
Tackling money laundering risk is not only in the hands of banks. Other financial institutions also have a gatekeeper role and are obliged to take measures under the Wwft.
To adequately manage this risk, it is important to have insight into the regulator’s expectations, and the specific areas of focus for your type of institution.
Since 21 May 2020, the amended fourth anti-money laundering directive has been implemented in the Wwft. The Wwft aims to strengthen the prevention and combating of money laundering and terrorist financing. In the Netherlands, the AFM, DNB and BFT, among others, are responsible for monitoring compliance with the obligations arising from the Wwft and the Sanctions Act.
For each institution covered by the scope of the Wwft, the breakdown is as follows:
AFM:
- (managers of)investment firms;
- (managers of)investment institutions;
- life insurance intermediaries;
- collective investment schemes in transferable securities (UCITS).
DNB:
- banks;
- pension funds;
- premium pension institutions;
- credit institutions;
- crypto service providers;
- electronic money institutions;
- payment institutions;
- insurers;
- exchange institutions;
- trust companies;
- clearing houses;
- safes lessors.
BFT:
- accountants;
- tax advisers;
- notaries.
Tax authorities/ Supervisory office Wwft
- notaries, brokers or intermediaries in high value items;
- valuers, dealers/sellers of goods, pawnbrokers and domiciliaries.
On the issue of financial economic crime – which includes money laundering – cooperation takes place within the Financial Expertise Centre (FEC), with the Public Prosecutor’s Office, the Tax Authority, the FIU, FIOD and the police. There is also an increasing focus on international cooperation and supervision.
Strict supervision
Both the AFM and DNB regularly conduct investigations into the extent to which institutions comply with the requirements arising from the Wwft. This shows that there are still shortcomings. For instance, CDD policies and SIRA are not always in order yet. Attention is also needed for knowledge and training.
An institution that fails to comply or is inadequate may face supervisory action (e.g. a designation or possibly even a fine).
Among other things, the financial regulators will look at the extent to which you have your policies and procedures in place. For example, it is important that you ensure that client due diligence is properly conducted and are able to identify Ultimate Beneficial Owners (UBOs) and Politically Exposed Persons (PEPs). You ensure that your institution has a proper transaction monitoring process in place.
It is also important that you ensure that you identify the integrity risks for your company and put in place the right control measures for this. For this, you use the SIRA (systematic integrity risk analysis). DNB has published guidelines for this.
Keeping up-to-date with financial laws and regulations
The important thing is that you meet the set standards of your financial regulator. Both AFM, DNB and the Ministries of Finance and Security and Justice have published guidance documents. The guidance documents cover the general aspects of the Wwft and therefore apply to all Wwft institutions. Companies are expected to study them and apply them in daily practice.
With Ruler, you make sure you are up to date with current and future financial standards. The software sends you alerts on important developments that are relevant to you.
Want to know more?
Also read our overview article on possible enforcement decisions by regulators.
Could you use help in communicating with the regulator, or do you need support in applying for a licence from the AFM or DNB? Then contact us for a no-obligation consultation.