The evaluation report of the Financial Action Task Force ("FATF"), published on 25 February 2011, has led the Ministry of Finance and the Ministry of Security and Justice to propose amending the Dutch Act on the Prevention of Money Laundering and Terrorist Financing on a number of points. Market parties were invited to provide input on the bill until 11 September 2011.

The majority of shortcomings found by the FATF concern client due diligence. Hence, most of the proposed amendments relate to this specific aspect of the Act:

  • in all instances organisations will have to identify the beneficial owner or, alternatively, establish that a beneficial owner does not exist
  • when an individual presents himself as a client, organisations must verify if the individual acts on his own behalf or on behalf of others
  • if the client is a legal entity, the organisation must know which individuals may legally represent the entity
  • rules are proposed for the interaction with trusts. The exemption from carrying out client audits that applies to trust offices will be limited to designated trust services
  • organisations must consider whether a notification of an unusual transaction is required when the client and the beneficial owner cannot be identified, their identity cannot be verified, or the purpose and intended nature of the business relationship cannot be established

The Act will additionally be clarified or amended on a number of other aspects, including:

  • the definition of 'transaction' will be changed to clarify that an organisation must always report a transaction if it establishes that a transaction of a client, or of a third party for the benefit of the client, is unusual. In principle it will not be relevant when the unusual transaction took place
  • under the existing rules a person who has ceased to be active as a politically exposed person ("PEP") for at least one year will no longer qualify as a PEP. This period will be extended to five years. The PEP measures apply to all foreign PEP, even if they do not reside in the Netherlands. Finally, the PEP measures will also apply where the beneficial owner rather than the client is the PEP
  • the scope of the Act is extended to all registered property
  • advice or assistance in respect of the purchase or takeover of a part of a business will also fall under the notification requirement
  • advice or assistance in respect of the creation of a right of mortgage without any additional transfer will be included as a notifiable service for legal professionals