The 2007 U.S. Department of State (DoS) report maintains that the Netherlands is compliant with all the Financial Action Task Force (FATF) Recommendations on Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) with respect to both legislation and enforcement. However, this report does not address the Netherlands' compliance with the individual FATF 40+9 recommendations and, apart from this statement of compliance from the DoS report, there is very little information publicly available addressing the Netherlands' compliance with the FATF recommendations. The 2004 Report on the Observance of Standards and Codes (ROSC) on AML/CFT by the International Monetary Fund (IMF) also attests that the Netherlands complies well with most of the FATF Recommendations. However, the 2004 ROSC is based on the 2002 (old) methodology, and the FATF revised its methodology in 2004. The Netherlands criminalized money laundering in 1994 and terrorist financing in 2004. It complies with the Second and Third European Union (EU) Money Laundering Directives. The De Nederlandsche Bank (DNB) website states that the Disclosure of Unusual Transactions (Financial Services) Act (Wmot), which entered into force in 1994, is the key legal instrument in the fight against money laundering. The Dutch Government, per the 2007 U.S. DoS report, has recently taken steps to make the AML/CFT regime more effective, including issuing a money-laundering Directive in November 2005 on financial crime investigation, prosecution and the use of financial intelligence. The authorities also introduced a new set of indicators in November 2005 on the filing of unusual transactions based on risk and amended the Wmot and the Identification (Provision of Services) Act in May 2006, thereby expanding supervisory authority, introducing punitive damages and incorporating terrorism financing as an indicator in reporting unusual transactions.

General Overview

The 2007 U.S. Department of State (DoS) report maintains that the Netherlands "is in compliance with all FATF [Financial Action Task Force] Recommendations, with respect to both legislation and enforcement." The report further notes that the country criminalized money laundering in 1994 and terrorist financing in 2004 and that it also complies with the Second and Third European Union (EU) Money Laundering Directives. A 2001 Circular issued by De Nederlandsche Bank (the Dutch Central Bank or DNB), states that the Netherlands has endorsed the 40 FATF recommendations on money laundering and has transposed them into Dutch law. Further, the DNB has issued requests to institutions to exercise caution in forming and maintaining business relationships with natural and legal persons from the FATF list of non-cooperative countries and territories (NCCTs), and has decided to address compliance in its supervisory examinations.

The DNB website states that the Disclosure of Unusual Transactions (Financial Services) Act (Wet melding ongebruikelijke transacties, or Wmot), which entered into force in 1994, is the key legal instrument in the fight against money laundering. The DNB supervises compliance with the Wmot, and in the event of a money laundering offence being discovered or suspected, it must notify the Office for Disclosure of Unusual Transactions under the Wmot. The DNB also evaluates the adequacy of Anti-Money Laundering (AML) policies and measures at the institutions it supervises.

The Financial Markets Authority (Autoriteit Financiële Markten, or AFM) website mentions that it contains the Department of Integrity, which has the residual responsibility of supervising compliance with the Identification (Provision of Services) Act (Wet identificatie bij dienstverlening, or Wid), the Wmot, and the Sanctions Act (combating the financing of terrorism), if other designated agencies do not do so.

The 2007 U.S. DoS report notes that the Netherlands has a comprehensive money-laundering legislative framework. All supervised entities must file suspicious transaction reports (STR) of any amount, as well as cash transactions over €15, 000 to the country's Financial Intelligence Unit (FIU). The Ministry of Justice (Ministerie van Justitie, or MvJ) website discloses that, in 2006, the country's former FIU, the Office for the Disclosure of Unusual Transactions (Meldpunt Onjebruikelijke Transacties, or MOT), which was a part of the MvJ, merged with the Office of Operational Support of the National Public Prosecutor (Bureau fer ondersteuning, or BLOM) to form a new FIU, to be called the FIU-the Netherlands. This new FIU became a part of the National Police Services Agency (KLPD), and is listed on the Egmont Group website as MOT/BLOM. The 2007 U.S. DoS report adds that, after subsequent amendments to the money-laundering laws, the list of reporting entities in the Netherlands has expanded to include banks, bureaux de change, casinos, life insurance companies, securities firms, stock brokers, credit card companies, trust companies, financing companies, commercial dealers of high-value goods, notaries, lawyers, real estate agents/intermediaries, accountants, business economic consultants, independent legal advisers, trust companies and other providers of trust related services, and tax advisors.

The Principles

1. Legal Systems and Related Institutional Measures

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Despite detailed information on many of the recommendations that make up this principle, there is insufficient publicly available information on the Netherlands' compliance with the recommendations relating to Principle 1. Regarding FATF Recommendations 1 and 2 on the criminalization of money laundering, the practice has been criminalized in the Netherlands since 1993, when the Wmot was enacted (it came into force in 1994). The 2007 U.S. DoS report notes that subsequent laws and judicial decisions also made it easier to prosecute money laundering. The burden of proof on the public prosecutor of the origin of funds is lifted, and self laundering is covered. Further, the report finds that the Dutch AML legislation is "comprehensive" with broad reporting, customer identification, and beneficial ownership requirements. Also, the government has been taking steps to make the regime more effective, including issuing a money-laundering directive in November 2005 on financial crime investigation, prosecution, and the use of financial intelligence. A new set of indicators were also introduced in November 2005 on filing unusual transactions based on risk. In May 2006, the Wmot and Wid were amended, expanding supervisory authority, introducing punitive damages, and incorporating terrorist financing as an indicator in reporting unusual transactions. As regards to predicate offenses, the report observes that the Netherlands has an "all offenses regime for predicate offenses of money laundering." The 2004 IMF ROSC also finds that the Netherlands has criminalized money laundering and terrorist financing by signing and implementing all Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) related international conventions. Not ratified at the time was the Palermo Convention, but it was expected to be ratified soon. The 2007 U.S. DoS report confirms that the Netherlands has since become a signatory to the Palermo Convention. Further, predicate offenses are punishable by a maximum of six months imprisonment or more. Self-laundering and laundering by legal persons are covered in law. However, foreign crimes are not explicitly spelled out as predicate offenses in the laws; and AML penalties are very low.

As regards Special Recommendation 2 on the criminalization of terrorist financing, the U.S. DoS report notes that this activity was criminalized in the Netherlands in 2004 with the Act on Terrorist Offences, which implements the 2002 EU framework decision on combating terrorism. The report adds that "the Act introduces Article 140A of the Criminal Code, which criminalizes participation in an organization when the intent is to commit acts of terrorism, and defines participation as membership or providing provision of monetary or other material support." Article 140A penalizes participation in a terrorist organization with 15 years' imprisonment, and leadership of such an organization is punishable by life imprisonment. The government, per the report, also formed the National Counterterrorism Coordinator's Office in 2004 to "streamline and enhance Dutch counterterrorism efforts." It is considering new legislation to expand investigative powers and coercive measures in anti-terrorist questioning. The Dutch sanctions regime is also directly based on UN resolutions and EU regulations. EU Regulation 2580/2001, which implements UN Security Council Resolution (UNSCR) 1373, is transposed into Dutch law through the amended "Sanction Provision for the Duty to Report on Terrorism." Dutch law also makes dealing with persons on the UNSCR 1267 Sanctions Committee's consolidated list a criminal offense. Council Regulation 881/02 implements UNSCR 1267/1390. The 2004 IMF ROSC finds that domestic laws and procedures and EU regulations provide a sound basis for the implementation of the UNSCRs on combating terrorism.

With respect to Recommendation 3 on confiscation, freezing, and seizing of the proceeds of crime, the 2007 U.S. DoS report finds that the 1992 Asset Seizure and Confiscation Act, as amended and strengthened in 2003, governs asset forfeiture, and the law is enforced by the police and other special investigation services. The report finds that the enforcement entities have adequate powers and resources and can integrate their asset seizure efforts. The seized assets are deposited in the general fund of the Ministry of Finance. Special court procedures are in place. The real-time assistance of financial detectives and accountants and the Proceeds of Crime Office (BOOM), a special bureau advising the Office of the Public Prosecutor in international and complex seizure and confiscation cases, promote the confiscation of criminal assets. Internationally, BOOM formed the Camden Asset Recovery Network in the Hague in September 2004 to facilitate asset recovery expertise and information sharing. The government also has asset-sharing agreements with the U.S., the United Kingdom and Luxembourg. In addition, since June 2004 the government has taken several steps to make asset seizure more effective and enhance the BOOM's asset forfeiture capacity, by increasing the number and expertise of public prosecutors and establishing a specific asset recovery fund. The U.S. DoS report states that the Office of the Public Prosecutor seized €11 million worth of assets in 2005. As regards Special Recommendation III on freezing of funds for terrorist financing, the 2007 U.S. DoS report observes that "the Netherlands does not require a collective EU decision to identify and freeze assets suspected of being linked to terrorism nationally." Further, the decision to freeze assets is shared by the Minister of Foreign Affairs and the Minister of Finance and is usually taken within three days of identification.

In relation to Recommendations 26, 30 and 32 on the FIU and its functions, the 2007 U.S. DoS report notes that the Dutch FIU is a "hybrid administrative-law enforcement unit." It was formed by the 2006 merger of the BLOM with the MOT, which was housed within the MvJ. The new, integrated body became a part of the KLPD. The FIU receives and analyzes STRs, forwards them to the Police Investigation Service for further investigation and prosecution, and shares financial and law enforcement information with foreign FIUs. The 2007 U.S. DoS report observes that "over the last five years, the MOT and the BLOM cooperated closely in responding to international requests for information, so this merger has not changed the nature of the Dutch reporting system." The FIU created an electronic network (called Intranet Suspicious Transactions, or IST) and a special unit (called the MBA-unit), to more efficiently analyze STRs and detect terrorist financing. The FIU forwards STRs to Europol, which analyzes them using the BLOM methodology. The FIU is a member of the Egmont Group.

As regards to freezing powers of the FIU, the 2004 IMF ROSC finds that judicial powers to freeze assets make such authority for the FIU unnecessary. With respect to statistics, the ROSC observes that they are insufficiently maintained, making it difficult to assess the effectiveness of the AML/CFT framework. As for Special Recommendation IX on cross-border declaration and disclosure, the 2007 U.S. DoS report finds that the EU reached an agreement on cash courier regulation during the 2004 Dutch presidency of the EU, and the Netherlands was to implement it in mid 2007.

2. Preventive Measures - Financial Institutions

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The 2004 IMF ROSC on AML/CFT informs that the Netherlands has "a highly developed set of laws and regulations [that] address preventive measures and these measures are adjusted and updated regularly" (p. 54). However, the ROSC is based on the 2002 (old) methodology and there is little information publicly available as to Netherlands compliance with the FATF recommendations per the 2004 methodology.

The 2007 U.S. DoS report notes that all supervised entities file STRs on transactions of any amount, as well as cash transactions over €15, 000 to the country's FIU. After subsequent amendments to the money-laundering laws, the list of reporting entities in the Netherlands has expanded to include banks, bureaux de change, life insurance companies, securities firms, stock brokers, credit card companies, financing companies, and a wide range of non-financial entities. The report further notes that Dutch law mandates financial institutions to maintain transaction records for at least five years after the termination of the relationship. Also no secrecy laws prohibit banks from disclosing client information to their supervisors. The 2004 IMF ROSC finds that the respective financial sector regulators are charged with the responsibility of oversight of the financial institutions' compliance with AML/CFT laws and regulations, adding that they have adequate risk management tools to analyze risks associated with money laundering and terrorist financing. Further, the DNB has issued the Basel Committee Customer Due Diligence (CDD) paper to credit institutions in 2002 asking them to benchmark their CDD practices with the requirements set out in the paper. An additional explanation on the paper in 2003 served as further CDD guidelines, though the ROSC asserts that they are not comprehensive.

3. Preventive Measures - Designated non-Financial Business and Professions

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The 2007 U.S. DoS report finds that the reporting requirements under the Wmot and the Wid were expanded in 2001 to cover "trust companies, financing companies, and commercial dealers of high-value goods," and further in 2003 to include "notaries, lawyers, real estate agents/intermediaries, accountants, business economic consultants, independent legal advisers, trust companies and other providers of trust related services, and tax advisors." In addition, the enactment of the Money Transfer and Exchange Offices Act in June 2001 requires permits to operate money-transfer and exchange services, subjects them to the supervision of the DNB, and imposes customer identification and reporting requirements (on transactions amounting to more than €2,000) on them. Nonetheless there is scant information publicly available addressing Netherlands compliance with the FATF recommendations relating to this principle.

4. Legal Person and Arrangements & Non-Profit Organizations

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There is insufficient information publicly available addressing Netherlands compliance with the FATF recommendations relating to this principle. However, the 2007 U.S. DoS report mentions that all persons and entities, including churches, religious institutions, foundations, charities, and other nonprofit organizations have to undergo identification requirements in financial institutions in the Netherlands. Identification is also required for beneficial ownership. This, as well as unusual transaction reports pertaining to them, constitutes the first step towards prevention of abuse of the non-profit sector. The DoS add that the second step is the Dutch civil law requirement to register all active foundations with the Chambers of Commerce, and with the tax authorities for tax exemptions. Accordingly, about 15,000 such organizations and their managements register their statutes and file annual reports, which are liable to auditing. Further, most Dutch charities are also registered for monitoring by private self-regulatory bodies that perform watchdog functions, like the Central Bureau for Fund Raising. The government plans to introduce an ongoing screening system in 2007 to replace the initial screening of the founders of these charities and foundations and strengthen the combat against money laundering and terrorist financing.

5. National and International Co-operation

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Despite detailed information on many of the recommendations that make up this principle, there is insufficient publicly available information on the Netherlands' compliance with the recommendations. The 2007 U.S. DoS report finds that the Netherlands is party to the 1988 UN Drug Convention, the UN International Convention for the Suppression of the Financing of Terrorism, and the UN Convention against Transnational Organized Crime. The 2004 IMF ROSC also finds that domestic laws and procedures as well as EU regulations provide a sound basis for the implementation of the UNSCRs on combating terrorism. The Dutch sanctions regime, per the 2007 U.S. DoS report, is also directly based on UN resolutions and EU regulations. EU Regulation 2580/2001, which implements UNSCR 1373, is transposed into the Dutch legal regime through the amended "Sanction Provision for the Duty to Report on Terrorism". The Dutch law also makes dealing with persons on the UNSCR 1267 Sanctions Committee's consolidated list a criminal offense. Council Regulation 881/02 implements UNSCR 1267/1390.

Regarding money laundering and terrorist financing matters, the 2004 IMF ROSC adds that the Netherlands "has a fairly comprehensive set of bilateral and multilateral treaties that provide for mutual legal assistance and extradition" and "provides timely and effective follow-up to mutual legal assistance requests" (p. 53). It also has new immigration laws, extradition procedures, and the power to prosecute its citizens for foreign crimes. However, the ROSC advises the Netherlands to provide mutual assistance without treaty arrangements and to ensure stricter enforcement of foreign prosecution, forfeiture, and confiscation. As for other forms of international cooperation, the 2007 U.S. DoS report finds that the MOT supervised the PHARE Project for the EU between March 2002 and December 2003 to provide support to a dozen Central and Eastern European countries to develop and improve their AML regimes. On the heels of that project, the MOT embarked on the FIU.NET Project, "an electronic exchange of current information between European FIUs by means of a secure intranet." Also, in March 2006, the country hosted a major international terrorist financing conference. The Netherlands is an FATF member and a member of the Council of Europe Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures. It is also a cooperating and supporting member of the Caribbean Financial Action Task Force. As a member of the Egmont Group, the MOT maintains close ties with the U.S Treasury's Financial Crimes Enforcement Network (FinCEN) as well as with other Egmont members. The report commends the Netherlands for being "involved in efforts to expand international cooperation."