FATF urges the Netherlands to introduce a separate offence for the financing of terrorism

The Financial Action Task Force on Money Laundering (FATF) has evaluated the level of compliance by the Netherlands with the FATF's 40 anti money laundering recommendations and its nine special recommendations on combating the financing of terrorism.

One of the points that the FATF is critical of concerns the fact that the financing of terrorism is not an autonomous criminal offence under Dutch law. It is only criminalised on the basis of the offence of "preparation to commit a serious crime" or "participation in a terrorist organisation". Meanwhile, the Minster of Security and Justice has announced his intention to add the financing of terrorism as an autonomous offence to the Dutch Criminal Code and will submit a bill to that effect before the end of 2011. This introduction will bring the Netherlands in line with other countries that have already criminalised the financing of terrorism as a separate offence.

In its evaluation, the FATF also points to shortcomings in the client screening that institutions have to carry out under the Dutch Money Laundering and Terrorist Financing Prevention Act. These shortcomings are partly caused by the discrepancy between the FATF's recommendations and European regulation. The Minister of Finance is preparing a bill amending the Act to address this issue.

Lastly, the FATF is critical of the effectiveness of the Financial Intelligence Unit Netherlands, previously the Office for the Notification of Unusual Transactions. The FIU Netherlands is the government agency to which unusual transactions are notified. The criticism is partly related to the fact that the Netherlands has a different notification system from most other countries and partly to the level of operational analysis. Other elements of criticism focus on the organisational structure and independence of the FIU Netherlands.

Minister of Finance publishes new guidelines on prevention of money laundering and financing of terrorism

The Minister or Finance has introduced new guidelines for the implementation of statutory duties to prevent money laundering and financing of terrorism. The guidelines aim to contribute towards the development of internal preventative procedures within financial institutions. The guidelines address, among other things:

  • The client screening based on a risk-orientated approach. Institutions must screen clients before providing services. The screening can be adjusted according to the risk posed by a certain type of client, relationship, product or transaction.
  • Notification of unusual transactions. An unusual transaction can be an indication of money laundering or terrorism financing; the notification duty is further defined by indicators which describe situations in which a transaction must be deemed unusual.  
  • Sanctions of the United Nations and the European Union and supervision of compliance with sanction regulations.  

Unless clearly stated otherwise, these general guidelines replace previous publications of the Ministry of Finance with regard to notification and identification requirements. The Ministry of Finance has also asked the relevant supervisors to develop specific guidelines for the various types of institutions.

The guidelines do not form a legally binding document but intend to help institutions interpret in practice their statutory obligations in combating money laundering and preventing the financing of terrorism.