Companies and individuals are increasingly receiving requests from banks asking them to explain account transactions. These transactions are blocked until explanations are provided to the bank's satisfaction. Of course, such checks annoy customers.
What's happening?
Money Laundering and Terrorist Financing Prevention Act (Wet ter voorkoming van witwassen en financieren van terrorisme - Wwft) obliges banks and other financial institutions to prevent money laundering and the financing of terrorism.
Criminals seek to launder money through large acquisitions, for example, buying yachts and villas, because upon subsequent resale, the proceeds are taxed and become legal. Individuals and legal entities can transfer money to terrorist organizations to continue their activities. Therefore, the WWFT law is aimed at controlling criminal money transfers. Unfortunately, it is difficult to simply separate illegal transfers from legal ones, so almost all large and unusual transactions come under increased control.
The organizations mentioned above are required to report suspicious cash flows to the Financial Intelligence Unit (FIU) of the Netherlands. For each type of organization, there is a list of criteria for determining the suspiciousness of transactions compiled by the FIU, and this list is often expanded.
What transactions are checked?
In relation to individuals, the criteria for suspicious transactions are:
- Transfer of funds to and from conflict zones,
- Large amounts of funds received from abroad
- Charitable donations,
- Carrying out operations without documentary evidence,
- Using a personal account for business purposes,
- Using payment methods that leave no traces (such methods include the use of cryptocurrencies in payments),
- Purchase of real estate with subsequent quick resale,
- Acquisition of several real estate properties for your own use over a short period of time.
Organizations should clarify the criteria in the FIU.
Rights of banks and other financial organizations in relation to clients
Banks and other organizations have the right to demand from the client:
- Show your ID. The type of identification that the client must provide is determined by the organization independently.
- Provide an explanation for payments that are considered suspicious. You may be asked about the source of the money, as well as what and why you are going to spend it.
Interaction with FIU is confidential. Financial organizations do not have the right to inform anyone about a financial intelligence report about a suspicious transaction, including the client in respect of whom such a report was made.
Financial institutions may refuse to serve a client if they consider working with him to be risky. This often happens when:
- The client does not want to provide personal data or provides an insufficient amount of it,
- The client provides incorrect information about himself,
- The client is on the sanctions list.
How long it will be going on?
European governments, including the Netherlands, are committed to a decisive fight against money laundering and the financing of terrorism. Don't expect transaction checks to stop any time soon.
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Publication Date: 18.09.2023
