## 1. Indicators suggest that the Netherlands is susceptible to money laundering (ML)

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### Vulnerabilities and risk environment — key findings
- Relative size and openness:
  - The Netherlands is the 16th economy in the world by nominal GDP.
  - It ranks 7th in terms of the systemic importance of its financial sector.
  - It has an excellent communications network, convenient transportation infrastructure, and Rotterdam is one of the world’s busiest ports.
- Estimated proceeds of domestic crime:
  - Presently, the proceeds of domestic crime are estimated at approximately $14 billion, or 1.8 percent of the GDP.
- Crime and cross-border flows:
  - Substantial proceeds of crime are generated in the country, mostly stemming from fraud (including tax fraud) and illicit narcotics.
  - Academic work suggests a significant amount of criminal proceeds originating from foreign countries flows into the Netherlands for laundering.
- Terrorist financing (TF) risk:
  - There is terrorism and terrorist financing (TF) risk, but it appears limited based on available information.
  - The main current threat seems to come from international Islamic extremists, but the risk is currently deemed to be limited.

### Criminalization and legal framework — key findings
- Money laundering (ML):
  - The Netherlands have criminalized ML fully in line with the requirements under the Vienna and Palermo Conventions.
  - Dutch ML provisions cover all FATF-designated predicate offenses, extend to any type of property as defined in the FATF standard, and also apply to persons who commit the predicate offense.
- Terrorism financing (TF):
  - The Criminal Code does not provide for an autonomous offense of “terrorism financing,” but criminalizes such conduct based on the offense of “preparation to commit a serious crime” and “participation in a terrorist organization,” which falls short of the FATF standard.
  - Shortcomings noted:
    - The current legal framework criminalizes the “collection” of funds to commit a terrorist act only if the perpetrator has acquired or actually possess the funds.
    - The criminal provisions do not sufficiently apply to the financing of conduct covered by the offenses in the nine Conventions and Protocols listed in the Annex to the FT Convention.
    - Financing of an individual terrorist is criminalized only in relation to persons designated under UNSCR 1267 or 1373, or the EC or Dutch Sanctions Regulations.
  - A clear ministerial commitment to pursue the criminalization of terrorist financing (TF) in line with FATF Special Recommendation II (SR II) has been communicated by the Dutch authorities.

### Seizing, confiscation, and sanctions implementation — key findings
- Seizing and confiscation:
  - The Netherlands have in place a strong and comprehensive legal framework for the seizing and confiscation of the proceeds of crime, which has yielded some positive results.
  - Due to the absence of complete and more detailed statistics, it was not possible to determine that seizing and confiscation measures are applied in a fully effective manner with respect to ML, TF, and predicate offenses.
- UN sanctions (UNSCR 1267 and 1373):
  - The Netherlands have a strong and comprehensive framework to implement obligations under UNSCRs 1267 and 1373 and in a number of cases have effectively frozen funds and assets of designated terrorists and organizations.
  - Most important financial sectors are effectively supervised for compliance with EC and Sanctions Regulations.
  - Concerns remain whether authorities in practice make use of the possibility to circumvent the time delay on European level and freeze without delay funds and assets designated under UN Resolutions 1267 and 1373.

### Financial Intelligence Unit (FIU) and investigations — key findings
- FIU profile and governance:
  - The Netherlands has a long-standing FIU, one of the founding members of the Egmont Group, first established in 1994.
  - The legal framework governing the FIU is not yet complete; the reorganization into FIU-Netherlands has experienced delays.
  - The completion of the reorganization has eroded operational independence and affected effectiveness.
  - A new governance model was agreed in September 2010; it is complex and should be streamlined by reducing the number of institutions to which the FIU is accountable and simplifying reporting lines.
- FIU operational matters:
  - The FIU enjoys high trust for its professionalism, domestically and internationally.
  - The FIU has potential to produce high-quality financial analysis but should:
    - Reconsider how financial information is disseminated to LEAs, placing more emphasis on case-by-case dissemination.
    - Emphasize prioritization and a red flag–based approach.
    - Ensure timely and full access to all necessary information.
  - It could not be confirmed that analytical work of the FIU has significantly contributed to ML investigations and prosecutions; the number of ML criminal investigations triggered by disseminated financial information appears to be rather low.
- Financial investigations:
  - Financial investigations have been pursued through aggressive and effective approaches, as shown by a relatively high number of prosecutions for ML or ML and other offenses.
  - Dutch authorities encourage LEAs to prosecute ML and deprive offenders of proceeds in each case, even when proceeds are low.
  - LEAs have most powers necessary and are generally effective; however, the scope of legal privilege hinders locating and tracing assets and may negatively impact mutual legal assistance, freezing, seizure, and confiscation.

### Preventive measures — Financial institutions — key findings
- Legal framework and coverage:
  - Long-standing AML/CFT preventive measures dating back to 1993.
  - The Money Laundering and Terrorist Financing Prevention Act (WWFT), adopted in 2008, establishes CDD, record–keeping, and reporting requirements for a broad range of financial institutions and DNFBPs.
  - The scope of the WWFT covers all financial activities covered by the FATF definition of “financial institutions.”
- Customer due diligence (CDD) issues:
  - The legal framework for CDD is generally adequate, but problematic provisions include:
    - Definition of beneficial owner does not include the person that can exercise ultimate effective control over a legal arrangement.
    - Very broad exemptions for specified low-risk customers.
    - Treatment of all EU/EEA member states and certain other countries as a single-risk category for low-risk scenarios.
    - Transitional regime for existing customers relying on a de jure presumption of compliance with CDD requirements.
    - Limited scope and enforceability of countermeasures against countries that do not apply FATF Recommendations.
    - Requirement to verify the identity of the beneficial owner and the obligation to understand ownership and control structure apply only in high-risk scenarios.
    - No obligation for financial institutions to determine whether a beneficial owner is a politically-exposed person (PEP).
- Risk-based and principles-based approach:
  - The Dutch system emphasizes a risk-based approach complemented by a principles-based approach, allowing institutions to develop individualized CDD approaches.
  - The principles-based approach needs better support via guidance; implementation has been uneven, especially for beneficial ownership and PEPs.
  - Larger, multinational banks implement WWFT standards better than smaller or newly-formed banks.
- Suspicious transaction reporting (STR) and internal controls:
  - STR regime has a minor legal shortcoming: a 14-day period to report after a transaction is established suspicious, which is not consistent with the standard’s call for prompt reporting and raises effectiveness issues for asset recovery.
  - Reporting by insurance agents, life insurance companies, and bureau de change is particularly low.
  - Protections for reporting and the prohibition on tipping off present shortcomings.
  - Internal control requirements are found in the Act on Financial Supervision (Wft) and mostly meet standards but leave gaps; explicit obligation for internal controls implementing WWFT would be more robust.
  - Not all internal control, compliance, and internal audit requirements apply to all categories of financial enterprise.
  - WWFT and Wgt employee training requirements are limited and need broadening; obligations relating to the role and seniority of compliance officers need strengthening.
  - Record-keeping requirements in the tax law (AWR) and Civil Code (BW) are comprehensive.
- Extra-territorial application:
  - The WWFT obliges institutions to apply Dutch CDD standards to branches and subsidiaries in foreign countries, but this requirement does not extend beyond CDD to other AML/CFT measures and does not apply to branches and subsidiaries in EU Member States.
- Supervision:
  - Supervisors generally have powers and resources needed, operating a “twin peaks” system:
    - Dutch Central Bank (DNB) responsible for prudential supervision.
    - Authority for the Financial Markets (AFM) responsible for conduct of business.
  - Both have responsibility for enforcing AML/CFT measures.
  - Supervisory effectiveness varies by sector; doubts noted in insurance and securities sectors and in monitoring of precious metals dealers and accountants, though risk-based supervisory framework implementation is expected to address weaknesses.
  - Guidance to financial enterprises needs updating and broadening to include monitoring obligations; routine training for supervisory staff should be strengthened.

### Preventive measures — DNFBPs — key findings
- General regime:
  - Preventive measures for DNFBPs mirror those for financial institutions, with TCSPs subject to more comprehensive measures.
  - Authorities have invested resources and political commitment; the DNFBP regime is relatively comprehensive.
- Specific observations:
  - TCSPs: legal framework has only minor shortcomings and appears effectively implemented, but STR levels are low relative to financial flows and risks.
  - Real estate agents, lawyers, and notaries: a few shortcomings in CDD scope.
  - Reporting by notaries and accountants appears quite effective; recent positive developments for real estate agents.
  - Reporting by precious metals dealers and lawyers remains very low; authorities acknowledge significant risks in relation to lawyers.
  - Supervision: secrecy issues prevent effective supervision of lawyers by the designated supervisor.

### Legal persons, arrangements, and NPOs — key findings
- Beneficial ownership information:
  - Measures contributing to availability of beneficial ownership information include:
    - Obligation to register legal entities with the Chamber of Commerce.
    - Involvement of licensed and supervised notaries and trust service providers in establishment/management of certain legal entities.
    - Obligation under Dutch tax law to file annual returns.
  - Gaps remain: ultimate beneficial owner information may not be available, accessible, and/or up-to-date in all cases.
- Bearer shares:
  - Dutch law still permitted issuance and free transfer of bearer shares at the time of assessment.
  - A dematerialization process is in place but will not be completed and fully effective until 2013.
  - Authorities estimate bearer shares are no longer widely used in the Netherlands.
- NPO sector:
  - Measures in place ensure a high level of transparency for NPOs.
  - Information available on NPOs is generally comprehensive, particularly for NPOs within the Central Bureau for Fundraising (CBF) seal mechanism.
  - Information-sharing/cooperation mechanisms among competent authorities are in place but do not include the CBF, a private organization that maintains detailed information on a significant share of the sector.

### National and international cooperation, extradition, and MLA — key findings
- Mutual Legal Assistance (MLA):
  - The Netherlands has no overarching law dealing with MLA but cooperates internationally based on the Criminal Procedure Code.
  - Authorities may provide a wide range of assistance in ML and TF cases, without unduly restrictive conditions.
  - In relation to many countries, assistance in searching and seizing evidence can, with few exceptions, be provided only in ML cases involving corruption or transnational organized crime but not other predicate offenses.
  - Dual criminality requirements, and shortcomings in TF criminalization, limit the Netherlands’s ability to provide MLA in certain TF cases.
  - Legal privilege scope may unduly hinder LEAs’ access to information and documents held by notaries, lawyers, and tax accountants, including upon foreign request.
  - Due to lack of relevant statistics, the Netherlands did not establish that they effectively seize and confiscate funds based on foreign requests.
- Extradition:
  - ML is an extraditable offense in relation to Council of Europe Member States and countries with which the Netherlands has bilateral or multilateral extradition treaties.
  - For all other countries, only ML cases involving transnational organized crime or corruption are extraditable offenses.
  - TF is an extraditable offense, but dual criminality shortcomings under Special Recommendation II may limit extradition in certain TF cases.

### Key statistics and factual findings (verbatim)
- “Presently, the proceeds of domestic crime are estimated at approximately $14 billion, or 1.8 percent of the GDP.”
- Netherlands ranking and financial sector systemic importance:
  - 16th economy in the world by nominal GDP.
  - 7th in terms of the systemic importance of its financial sector.
- FIU and institutional dates:
  - FIU first established in 1994.
  - FIU restructuring process occurred in 2006.
  - New governance model agreed in September 2010.
  - WWFT adopted in 2008.
  - AML/CFT preventive measures dating back to 1993.
  - Dematerialization of bearer shares will not be completed and fully effective until 2013.
- Reporting time frame:
  - 14-day period to report after a transaction has been established suspicious.

### Key assessor recommendations (summary)
- Strengthen legal framework for TF to create an autonomous terrorism financing offense aligned with FATF standards, addressing collection, financing covered by the FT Convention Annex, and financing of individuals beyond UNSCR/EC/Dutch designations.
- Complete and streamline FIU reorganization to restore operational independence, simplify governance, and ensure timely access to necessary information.
- Improve FIU analytical prioritization, dissemination practices (case-by-case), and emphasis on red flag–based analysis to better support LEAs and trigger ML investigations.
- Strengthen STR regime to ensure prompt reporting (address the 14-day delay) and improve reporting quality across financial institutions and DNFBPs, particularly insurance agents, life insurers, bureau de change, precious metals dealers, and lawyers.
- Address legal issues limiting supervision and preventive measures for lawyers and other DNFBPs, including secrecy provisions that hinder supervision.
- Amend the Criminal Procedure Code to enable assistance in searching and seizing evidence in ML cases for a broader range of predicate offenses and make ML an extraditable offense regardless of the predicate offense involved.
- Enhance CDD framework by:
  - Expanding definition and verification obligations for beneficial owners (including persons with ultimate effective control over legal arrangements).
  - Narrowing overly broad low-risk exemptions and the EU/EEA single-risk categorization for low-risk scenarios.
  - Removing the limitation that beneficial owner verification and ownership/control understanding apply only in high-risk scenarios.
  - Introducing an obligation to determine whether beneficial owners are politically-exposed persons.
- Strengthen internal control, compliance, employee training, and compliance officer role/seniority requirements across financial enterprises; clarify Wft obligations for internal controls.
- Improve supervisory guidance and training, update guidance to include monitoring obligations as well as CDD, and address sectoral supervisory weaknesses (insurance, securities, precious metals, accountants).
- Improve availability, accessibility, and currency of beneficial ownership information for legal persons and arrangements; complete bearer share dematerialization process.
- Maintain and publish statistics in important areas to demonstrate effective implementation of the AML/CFT legal framework.

*Source: IMF assessment text provided in content unit _cr1191 - 1.      Indicators suggest that the Netherlands is susceptible to money laundering (ML).*

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### 1. Legal System and Related Institutional Measures

### Criminalization of Money Laundering
- R.1 – LC
- R.2 – LC
- Recommendations:
  - Review all information available with respect to the fines and prison sentence imposed in ML cases to determine whether the sanctions regime is applied in a fully effective and dissuasive manner, including in relation to legal persons.
  - Maintain accurate statistics on the number of ML investigations and predicate offenses in relation to which the ML provisions are applied.

### Criminalization of Terrorist Financing
- SR.II – PC
- Recommendations:
  - Criminalize terrorism financing fully in line with the FATF standard as per Ministerial Commitment.
  - Ensure that FT activities are investigated and prosecuted effectively in the Netherlands, for example by establishing TF as a separate criminal offense in line with the UN Convention for the Suppression of the Financing of Terrorism.

### Confiscation, Freezing, and Seizing of Proceeds of Crime
- R.3 – LC
- Recommendation:
  - Ensure that access to appropriate information and documents held by lawyers and other legal professionals is available in all cases.

### Freezing of Funds Used for Terrorist Financing
- SR.III – LC
- Recommendations:
  - Provide more guidance to the private sector, especially the non banking financial industry and DNFBPs, on the freezing obligations stemming from the international standard, including the obligation to check client files and databases against those lists.
  - Ensure that all FIs, not only banks, are effectively monitored for compliance with the EC and Sanctions Regulations.
  - Extend the freezing obligations under UNSCR 1267 to funds and other assets owned or controlled ―indirectly‖ by a designated individual, entity, or organization.

### The Financial Intelligence Unit and its Functions
- R.26 – PC
- Recommendations:
  - Complete the legal framework concerning the FIU-Netherlands.
  - Implement a simplified governance model so that issues that affect the operational independence of the FIU are fully addressed.
  - Streamline financial analysis.
  - Reconsider the whole ―dissemination‖ system, with a view to emphasize a more streamlined provision of information to law enforcement, on a case-by-case basis.
  - Ensure that the FIU has timely and full access to all data it requires to properly undertake its functions.

### Law Enforcement, Prosecution and Other Competent Authorities
- R.27 – C
- R.28 – LC
- Recommendations:
  - The authorities should review the scope of professional secrecy and privilege obligations, and consider amending the CPP to improve the authorities’ ability to obtain documents and information, having regard to the possibilities enabled by the European treaties.
  - When conducting investigations of money laundering and underlying predicate offences, competent authorities should be able to obtain from lawyers, notaries, and tax accountants, documents and information for use in those investigations, and in prosecutions and related actions.

### Cross Border Declaration or Disclosure
- SR IX– LC
- Recommendations:
  - Establish TF as an autonomous offence, and extend Customs’ responsibilities also in this area.
  - Extend the requirements to cases where currency is shipped through containerized cargo and where currency or bearer negotiable instruments are mailed by a natural or legal person.
  - Consider enhancing Customs authorities powers to stop or restraint the currency, when there is a suspicion of ML and when the person has fulfilled the declaration requirements.
  - Improve the quality of the data shared with the FIU.

---

### 2. Preventive Measures: Financial Institutions

### Risk of Money Laundering or Terrorist Financing
- No explicit findings beyond ratings R.5–R.8.

### Customer Due Diligence, including Enhanced or Reduced Measures
- R.5 – PC
- R.6 – PC
- R.7 – LC
- R.8 – LC
- Recommendations:
  - Clarify the issues related to the applicability of the CDD requirements envisaged by the WWFT (in particular those concerning beneficial ownership) to protected accounts opened prior to the entry into force of the updated Regulation on protected accounts.
  - Bring the definition of beneficial owner in line with the FATF standard (by referring it to the customer and by providing a reference to ―actual control’ also in the case of trusts and other legal arrangements).
  - Clarify the obligations to identify and to take reasonable measures to verify the ultimate beneficial owner and to understand the ownership and control structure of the customer in all circumstances regardless of risk.
  - Obligate financial institutions to determine whether the customer is acting on behalf of another person and to verify that a person purporting to act on behalf of the legal entity so authorized.
  - Provide further guidance on all CDD measures to financial institutions.
  - Address the exemptions for low-risk customers as adopted from the Third EC Money Laundering.
  - Oblige financial institutions to ensure that data and information obtained under the CDD process, such as the client risk profile and contact information, are kept up-to-date.
  - Repeal the transitional provision of the WWFT that deems the identification and record keeping requirements under the previous AML/CFT law as if it were duly fulfilled under the WWFT.
  - Require institutions to ascertain source of wealth and funds in all circumstances and not limited to business relations/transactions.
  - Review the PEP-related requirements to include non-Dutch PEPs resident in the Netherlands.
  - Introduce a requirement to obtain senior management approval to continue business relationship when a customer/beneficial owner becomes a PEP or is found to be a PEP during the course of an already established business relationship.
  - Extend the obligation for financial institutions to have risk based procedure to determine whether a customer is a PEP, also to the case of the beneficial owner.
  - Extend enhanced due diligence required to all non face-to-face relationships.
  - Reconsider the option envisaged by Article 8, para 2 c) of the WWFT, as it may not ensure effective CDD procedures in the case of non face-to-face transactions.

### Third Parties and Introduced Business
- R.9 – NC
- Recommendations:
  - Revise the obligation that is currently imposed on the third party to provide the information concerning the CDD process.
  - Introduce a requirement for financial institutions to satisfy themselves that a third party located within the EU and EEA is regulated and supervised (in accordance with Recommendation 23, 24 and 29), and has measures in place to comply with the CDD requirements set out in R.5 and 10. Alternatively, the authorities could consider conducting a thorough assessment of the supervisory framework and of the CDD measures in place in the concerned countries where the third parties are located and limit the location of third parties to those countries that have satisfactory supervisory framework and CDD measures.
  - Introduce enforceable requirements that place the ultimate responsibility for customer identification and verification with the financial institution relying on the third party.

### Financial Institution Secrecy or Confidentiality
- R.4 – C
- Recommendation:
  - Amend the WWFT (Article 22) to make explicit that supervisory authorities may share information collected for the purpose of Article 24 with other domestic authorities and foreign supervisors.

### Record Keeping and Wire Transfer Rules
- R.10 – LC
- SR.VII – C
- Recommendations:
  - Remove the ambiguity created by the different and conflicting record-retention provisions in the AW, BWR, WWFT, and Wft and make explicit that the record-retention requirements (including those in the BW and AWR) necessarily apply to all transactions and to business correspondence, account files, customer identification on all legal persons and arrangements and beneficial owners.
  - Ensure that records of transactions are maintained in a way that permits reconstruction of transactions for the purpose of prosecution and give the authorities powers to extend record retention requirements in particular cases.
  - Extend the record keeping requirement in the BPR Wft and BGFO Wft to all financial services categories identified in the Wft.

### Monitoring of Transactions and Relationships
- R.11 – LC
- R.21 – PC
- Recommendations:
  - Streamline the legislative and regulatory framework, eventually by introducing a separate obligation for all financial institutions to pay special attention to all complex, unusual large transactions, or unusual patterns of transactions that have no apparent or visible economic or lawful purpose, autonomous from the obligation to report suspicious transactions.
  - Introduce an explicit obligation for financial institutions to examine as far as possible the background and purpose of unusual transactions.
  - Consider re-introducing the practice of issuing detailed circulars to financial institutions after each FATF Plenary.
  - Introduce an enforceable obligation for financial institutions to give special attention to business relationships and transactions with persons from or in countries which do not or insufficiently apply the FATF Recommendations.

### Suspicious Transaction Reports and Other Reporting
- R.13 – LC
- R.14 – PC
- R.19 – C
- R.25 – C
- SR.IV – LC
- Recommendations:
  - Ensure that suspicious transactions are reported promptly to the FIU.
  - Enhance the effectiveness of the reporting system, including by raising awareness of financial institutions on the detection of suspicious transactions.
  - Ensure that protection from criminal liability only applies if suspicions are reported in good faith.
  - Extend the tipping-off prohibition to apply to directors, officers and employees and to cover cases where transactions are being reviewed internally to determine whether an STR should be filed.
  - The authorities are recommended to reconvene the Article 21 Committee or the Indicators Working Group to establish with the representatives of the reporting institutions how best to disseminate the analysis that is currently produced.
  - They are further recommended to consider issuing alerts to institutions when new information is available on the FIU web site.

### Internal Controls, Compliance, Audit and Foreign Branches
- R.15 – PC
- R.22 – PC
- Recommendations (amendments to WWFT, Wft, and Wgt):
  - Amend the Wft to clarify that the policies, procedures and controls required by the Wft must apply to the implementation of the obligations in the WWFT.
  - Amend the WWFT to include a direct requirement to train staff, on a regular basis.
  - Amend the Wft and Wgt to create a requirement for all regulated entities to have a compliance officer with adequate seniority access to management and resources.
  - Amend the Wft or implementing regulations to require screening of all employees to ensure high standards.
  - Amend the Wft or implementing obligations to apply the ongoing obligations on internal controls, compliance units, internal audit, training, and employee screening to all regulated financial entities covered by the WWFT.
  - Amend Article 2(1) of the WWFT (or provide in implementing regulations) to ensure that regulated entities with foreign branches and subsidiaries (in all countries, including EU and EEA Member States) should apply all AML/CFT measures (not just CDD) that are equivalent to Dutch standards or applying local standards where these are higher; and that apply Dutch standards in countries which do not or which insufficiently apply FATF Recommendations.

### Shell Banks
- R.18 – C
- Recommendation:
  - The authorities are recommended to amend Article 8(3) of the WWFT so that it applies to all correspondent banks, including those in the EU and EEA.

### Supervisory and Oversight System – Competent Authorities and SROs
- R.17 – LC
- R.23 – LC
- R.25 – LC
- R.29 – LC
- Recommendations:
  - The authorities should collect more comprehensive and detailed data by sector and by year, on the use of their inspection and enforcement powers with respect to AML/CFT matters and on the nature of the weaknesses being identified, so as update their understanding of ML and TF risks and to satisfy themselves that appropriate and effective action is taken in this area.
  - The AFM should review their approach to AML/CFT and increase their focus on monitoring the procedures put in place by regulated entities to detect and deter ML and FT and should implement increased monitoring of CDD practices by the large number of smaller businesses that are brokers.
  - The staff training program should be reviewed to ensure that each member of staff receives adequate training on AML/CFT and comprehensive data should be maintained on this.

### Money Value Transfer Services
- SR.VI – LC
- Recommendations:
  - The DNB is recommended to review its advice to the money transfer offices on reporting on the basis of the subjective indicator, in consultation with the FIU, so as to maximize the value of the reporting system and seek a level of reporting that accurately reflects the presumption of money laundering.
  - The authorities are also recommended to apply the provisions of Article 3:99 Wft to payment services providers, so that the owners may be subject to fit and properness tests.

---

### 3. Preventive Measures: Non-Financial Businesses and Professions

### Customer Due Diligence and Record-Keeping
- R.12 – PC
- Extend the scope of the CDD requirements to:
  - both the buyer and the seller of a transaction performed by a real estate agent;
  - the services designated by the WWFT for lawyers and notaries, when related to the first meeting with the client. This requirement should be set out in primary or secondary legislation;
  - TCSPs when providing a registered office; business address for a company, a partnership or any other legal person or arrangements, when this service is provided on a standalone basis.
- With respect to Recommendation 5:
  - All DNFBPs: Provide further guidance on all CDD measures.
  - All DNFBPs (except TCSPs): The recommendations made in section 3 for financial institutions also apply to TCSPs: Adopt measures consistent with the standards regarding the identification of the customer other than the beneficial owner and enhanced due diligence.
- With respect to Recommendation 10:
  - All DNFBPs (except TCSPs): Remove the ambiguity created by the different and conflicting record-retention provisions in the AW, BWR and the WWFT, and make explicit that the record-retention requirements necessarily apply to all transactions and to business correspondence, account files, customer identification on all legal persons and arrangements and beneficial owners.
  - TCSPs: Ensure that record keeping requirements on information on the customer (if different from the beneficial owner) and business correspondence, are kept for five years from the date the relationship with the customer ceases.

### Suspicious Transaction Reporting
- R.16 – PC
- With respect to Recommendation 13:
  - Extend the scope of the reporting requirement to:
    - both the buyer and the seller of a transaction performed by a real estate agent;
    - TCSPs for providing a registered office; business address for a company, a partnership or any other legal person or arrangements, when this service is provided on a standalone basis.
  - Ensure that suspicious transactions are reported promptly to the FIU.
  - Enhance the effectiveness of the reporting system.
- With respect to Recommendation 14:
  - The recommendations made in section 3.7 for financial institutions also apply to DNFBPs.
- With respect to Recommendation 15:
  - All DNFBPs (except TCSPs):
    - Require DNFBPs to develop internal policies, procedures and controls (except lawyers).
    - Require DNFBPs to establish an appropriate ongoing employee training.
    - Introduce the requirement of an independent audit function to test compliance with the procedures, policies and controls.
  - TCSPs:
    - Introduce the requirement of an independent audit function to test compliance with the procedures, policies and controls.
- With respect to Recommendation 21:
  - The recommendations made in section 3.6 for financial institutions also apply to DNFBPs.

### Regulation, Supervision, Monitoring, and Sanctions
- R.24 – PC
- R.25 – PC
- Recommendations:
  - Ensure that lawyers are subject to an effective system for ensuring compliance with AML/CFT requirements.
  - Increase the effectiveness of the measures in place concerning illegal internet casinos that have their mind and management in the Netherlands.
  - Increase effectiveness in the monitoring of precious metals dealers, lawyers and accountants.
  - The FIU should provide DNFBPs with a more specific feedback on reported transactions.

### Other Designated Non-Financial Businesses and Professions
- R.20 – C
- There are no recommendations with regard to this Recommendation.

---

### 4. Legal Persons and Arrangements & Nonprofit Organizations

### Legal Persons – Access to Beneficial Ownership and Control Information
- R.33 – PC
- Recommendations:
  - Information on ultimate beneficial owners of Dutch legal persons should be accessible and up-to-date in all cases.
  - The dematerialization process of bearer shares should be completed as soon as possible to ensure that such instruments issued by Dutch NVs are not abused for ML or TF purposes.

### Legal Arrangements – Access to Beneficial Ownership and Control Information
- R.34 – PC
- Recommendations:
  - The definition of the ―beneficial owners‖ as contained in the WWFT should extend to ―the natural person(s) who ultimately owns or controls a legal arrangement.‖
  - For trusts not administered by a Dutch FI or DNFBP, put in place additional measures to ensure that timely, accurate, and complete beneficial ownership information is available in all cases.

### Nonprofit Organizations
- SR.VIII – LC
- Recommendations:
  - For NPOs outside of the CBF’s seal mechanism undertake outreach initiatives to enhance NPO’s awareness about the risks of terrorist abuse.
  - Develop coordination and information exchange mechanisms that involve the CBF to facilitate the effectiveness of the supervisory framework.

---

### 5. National and International Cooperation

### National Cooperation and Coordination
- R.31 – LC
- Recommendations:
  - Make greater use of existing coordination bodies and, if appropriate, combine some of the bodies so as to focus the resources of the participating parties.
  - Encourage the supervisors and the FIU to make greater use of the information on reporting patterns and to consider benchmarking the Dutch experience against that of other countries so as to establish a risk-based awareness program to tackle those sectors where reporting is minimal.
  - Make greater use of the private sector’s desire for greater feedback from the FIU so as to maximize the value of the reporting process.

### The Conventions and UN Special Resolutions
- R.35 – PC
- SR.I – PC
- Recommendations:
  - Implement fully the Vienna and Palermo Conventions.
  - Implement fully the CFT Convention, in particular by addressing the shortcomings identified in SR II.
  - Address the shortcomings identified in relation to the implementation of UNSCRs 1267 and 1373.

### Mutual Legal Assistance
- R.36 – PC
- R.37 – LC
- R.38 – PC
- SR.V – PC
- Recommendations:
  - Ensure that assistance in searching and seizing of evidence can be provided in all ML cases and in relation to any requesting country.
  - Address all shortcomings identified under Special Recommendation II.
  - Ensure that access to information held by notaries, lawyers and accountants can be granted in all cases, including in the context of MLA.

### Extradition
- R.39 – PC
- R.37 – LC
- SR.V – PC
- Recommendations:
  - In relation to non-Council of Europe members and countries with which the Netherlands have not signed a multilateral or bilateral extradition treaty, ML should be an extraditable offense in all cases, including drug related cases.
  - Address all shortcomings identified under Special Recommendation II.
  - Set out a legal obligation by Dutch authorities to prosecute a suspect domestically in cases where an extradition request for ML is denied purely on the basis of nationality.

### Other Forms of Cooperation
- R.40 – LC
- SR.V – PC
- Recommendation:
  - The authorities should review the scope of professional secrecy obligations and consider amending the CPP to make sure that it does not subject exchange of information to unduly restrictive conditions.

---

### 6. Other Issues

### Resources & Statistics — ratings and recommendations
- R.30 – LC
- R.32 – LC
- Recommendations:
  - Staff training should be required on an annual basis and sufficient data on the nature of training received by supervisory staff should be kept.
  - Accurate and complete statistics should be maintained on:
    1. the number and types of predicate offenses committed in the Netherlands;
    2. the number of investigations conducted for ML and FT;
    3. the types of predicate offenses involved in ML prosecutions and convictions;
    4. the number of ML and TF investigations in which assets were seized and the amounts seized in each case;
    5. the total amounts requested to be seized and eventually realized in each case should be maintained;
    6. the number of MLA requests received and granted in ML and TF cases in relation to the seizing and confiscation of assets and the total number of assets seized and confiscated based on foreign request;
    7. the number of extradition requests received in ML and TF cases and the number of cases rejected and granted as well as the time required to complete extradition proceedings.

*Source: _cr1191 - 1. Legal System and Related Institutional Measures*

### 1.      Indicators suggest that the Netherlands is susceptible to money laundering (ML)

### 1.      Indicators suggest that the Netherlands is susceptible to money laundering (ML)

### Vulnerabilities and risk environment
- Relative size and openness:
  - The Netherlands is the 16th economy in the world by nominal GDP.
  - It ranks 7th in terms of the systemic importance of its financial sector.
  - It has an excellent communications network, convenient transportation infrastructure, and Rotterdam is one of the world’s busiest ports.
- Estimated proceeds of domestic crime:
  - Presently, the proceeds of domestic crime are estimated at approximately $14 billion, or 1.8 percent of the GDP.
- Crime and cross-border flows:
  - Substantial proceeds of crime are generated in the country, mostly stemming from fraud (including tax fraud) and illicit narcotics.
  - Academic work suggests a significant amount of criminal proceeds originating from foreign countries flows into the Netherlands for laundering.
- Terrorist financing (TF) risk:
  - There is terrorism and terrorist financing (TF) risk, but it appears limited based on available information.
  - The main current threat seems to come from international Islamic extremists, but the risk is currently deemed to be limited.

### Criminalization and legal framework
- Money laundering (ML):
  - The Netherlands have criminalized ML fully in line with the requirements under the Vienna and Palermo Conventions.
  - Dutch ML provisions cover all FATF-designated predicate offenses, extend to any type of property as defined in the FATF standard, and also apply to persons who commit the predicate offense.
- Terrorism financing (TF):
  - The Criminal Code does not provide for an autonomous offense of “terrorism financing,” but criminalizes such conduct based on the offense of “preparation to commit a serious crime” and “participation in a terrorist organization,” which falls short of the FATF standard.
  - Shortcomings noted:
    - The current legal framework criminalizes the “collection” of funds to commit a terrorist act only if the perpetrator has acquired or actually possess the funds.
    - The criminal provisions do not sufficiently apply to the financing of conduct covered by the offenses in the nine Conventions and Protocols listed in the Annex to the FT Convention.
    - Financing of an individual terrorist is criminalized only in relation to persons designated under UNSCR 1267 or 1373, or the EC or Dutch Sanctions Regulations.
  - A clear ministerial commitment to pursue the criminalization of terrorist financing (TF) in line with FATF Special Recommendation II (SR II) has been communicated by the Dutch authorities.

### Seizing, confiscation, and sanctions implementation
- Seizing and confiscation:
  - The Netherlands have in place a strong and comprehensive legal framework for the seizing and confiscation of the proceeds of crime, which has yielded some positive results.
  - Due to the absence of complete and more detailed statistics, it was not possible to determine that seizing and confiscation measures are applied in a fully effective manner with respect to ML, TF, and predicate offenses.
- UN sanctions (UNSCR 1267 and 1373):
  - The Netherlands have a strong and comprehensive framework to implement obligations under UNSCRs 1267 and 1373 and in a number of cases have effectively frozen funds and assets of designated terrorists and organizations.
  - Most important financial sectors are effectively supervised for compliance with EC and Sanctions Regulations.
  - Concerns remain whether authorities in practice make use of the possibility to circumvent the time delay on European level and freeze without delay funds and assets designated under UN Resolutions 1267 and 1373.

### Financial Intelligence Unit (FIU) and investigations
- FIU profile and governance:
  - The Netherlands has a long-standing FIU, one of the founding members of the Egmont Group, first established in 1994.
  - The legal framework governing the FIU is not yet complete; the reorganization into FIU-Netherlands has experienced delays.
  - The completion of the reorganization has eroded operational independence and affected effectiveness.
  - A new governance model was agreed in September 2010; it is complex and should be streamlined by reducing the number of institutions to which the FIU is accountable and simplifying reporting lines.
- FIU operational matters:
  - The FIU enjoys high trust for its professionalism, domestically and internationally.
  - The FIU has potential to produce high-quality financial analysis but should:
    - Reconsider how financial information is disseminated to LEAs, placing more emphasis on case-by-case dissemination.
    - Emphasize prioritization and a red flag–based approach.
    - Ensure timely and full access to all necessary information.
  - It could not be confirmed that analytical work of the FIU has significantly contributed to ML investigations and prosecutions; the number of ML criminal investigations triggered by disseminated financial information appears to be rather low.
- Financial investigations:
  - Financial investigations have been pursued through aggressive and effective approaches, as shown by a relatively high number of prosecutions for ML or ML and other offenses.
  - Dutch authorities encourage LEAs to prosecute ML and deprive offenders of proceeds in each case, even when proceeds are low.
  - LEAs have most powers necessary and are generally effective; however, the scope of legal privilege hinders locating and tracing assets and may negatively impact mutual legal assistance, freezing, seizure, and confiscation.

### Preventive measures — Financial institutions
- Legal framework and coverage:
  - Long-standing AML/CFT preventive measures dating back to 1993.
  - The Money Laundering and Terrorist Financing Prevention Act (WWFT), adopted in 2008, establishes CDD, record–keeping, and reporting requirements for a broad range of financial institutions and DNFBPs.
  - The scope of the WWFT covers all financial activities covered by the FATF definition of “financial institutions.”
- Customer due diligence (CDD) issues:
  - The legal framework for CDD is generally adequate, but problematic provisions include:
    - Definition of beneficial owner does not include the person that can exercise ultimate effective control over a legal arrangement.
    - Very broad exemptions for specified low-risk customers.
    - Treatment of all EU/EEA member states and certain other countries as a single-risk category for low-risk scenarios.
    - Transitional regime for existing customers relying on a de jure presumption of compliance with CDD requirements.
    - Limited scope and enforceability of countermeasures against countries that do not apply FATF Recommendations.
    - Requirement to verify the identity of the beneficial owner and the obligation to understand ownership and control structure apply only in high-risk scenarios.
    - No obligation for financial institutions to determine whether a beneficial owner is a politically-exposed person (PEP).
- Risk-based and principles-based approach:
  - The Dutch system emphasizes a risk-based approach complemented by a principles-based approach, allowing institutions to develop individualized CDD approaches.
  - The principles-based approach needs better support via guidance; implementation has been uneven, especially for beneficial ownership and PEPs.
  - Larger, multinational banks implement WWFT standards better than smaller or newly-formed banks.
- Suspicious transaction reporting (STR) and internal controls:
  - STR regime has a minor legal shortcoming: a 14-day period to report after a transaction is established suspicious, which is not consistent with the standard’s call for prompt reporting and raises effectiveness issues for asset recovery.
  - Reporting by insurance agents, life insurance companies, and bureau de change is particularly low.
  - Protections for reporting and the prohibition on tipping off present shortcomings.
  - Internal control requirements are found in the Act on Financial Supervision (Wft) and mostly meet standards but leave gaps; explicit obligation for internal controls implementing WWFT would be more robust.
  - Not all internal control, compliance, and internal audit requirements apply to all categories of financial enterprise.
  - WWFT and Wgt employee training requirements are limited and need broadening; obligations relating to the role and seniority of compliance officers need strengthening.
  - Record-keeping requirements in the tax law (AWR) and Civil Code (BW) are comprehensive.
- Extra-territorial application:
  - The WWFT obliges institutions to apply Dutch CDD standards to branches and subsidiaries in foreign countries, but this requirement does not extend beyond CDD to other AML/CFT measures and does not apply to branches and subsidiaries in EU Member States.
- Supervision:
  - Supervisors generally have powers and resources needed, operating a “twin peaks” system:
    - Dutch Central Bank (DNB) responsible for prudential supervision.
    - Authority for the Financial Markets (AFM) responsible for conduct of business.
  - Both have responsibility for enforcing AML/CFT measures.
  - Supervisory effectiveness varies by sector; doubts noted in insurance and securities sectors and in monitoring of precious metals dealers and accountants, though risk-based supervisory framework implementation is expected to address weaknesses.
  - Guidance to financial enterprises needs updating and broadening to include monitoring obligations; routine training for supervisory staff should be strengthened.

### Preventive measures — Designated Non-Financial Businesses and Professions (DNFBPs)
- General regime:
  - Preventive measures for DNFBPs mirror those for financial institutions, with TCSPs subject to more comprehensive measures.
  - Authorities have invested resources and political commitment; the DNFBP regime is relatively comprehensive.
- Specific observations:
  - TCSPs: legal framework has only minor shortcomings and appears effectively implemented, but STR levels are low relative to financial flows and risks.
  - Real estate agents, lawyers, and notaries: a few shortcomings in CDD scope.
  - Reporting by notaries and accountants appears quite effective; recent positive developments for real estate agents.
  - Reporting by precious metals dealers and lawyers remains very low; authorities acknowledge significant risks in relation to lawyers.
  - Supervision: secrecy issues prevent effective supervision of lawyers by the designated supervisor.

### Legal persons, arrangements, and non-profit organizations (NPOs)
- Beneficial ownership information:
  - Measures contributing to availability of beneficial ownership information include:
    - Obligation to register legal entities with the Chamber of Commerce.
    - Involvement of licensed and supervised notaries and trust service providers in establishment/management of certain legal entities.
    - Obligation under Dutch tax law to file annual returns.
  - Gaps remain: ultimate beneficial owner information may not be available, accessible, and/or up-to-date in all cases.
- Bearer shares:
  - Dutch law still permitted issuance and free transfer of bearer shares at the time of assessment.
  - A dematerialization process is in place but will not be completed and fully effective until 2013.
  - Authorities estimate bearer shares are no longer widely used in the Netherlands.
- NPO sector:
  - Measures in place ensure a high level of transparency for NPOs.
  - Information available on NPOs is generally comprehensive, particularly for NPOs within the Central Bureau for Fundraising (CBF) seal mechanism.
  - Information-sharing/cooperation mechanisms among competent authorities are in place but do not include the CBF, a private organization that maintains detailed information on a significant share of the sector.

### National and international cooperation, extradition, and mutual legal assistance (MLA)
- Mutual Legal Assistance (MLA):
  - The Netherlands has no overarching law dealing with MLA but cooperates internationally based on the Criminal Procedure Code.
  - Authorities may provide a wide range of assistance in ML and TF cases, without unduly restrictive conditions.
  - In relation to many countries, assistance in searching and seizing evidence can, with few exceptions, be provided only in ML cases involving corruption or transnational organized crime but not other predicate offenses.
  - Dual criminality requirements, and shortcomings in TF criminalization, limit the Netherlands’s ability to provide MLA in certain TF cases.
  - Legal privilege scope may unduly hinder LEAs’ access to information and documents held by notaries, lawyers, and tax accountants, including upon foreign request.
  - Due to lack of relevant statistics, the Netherlands did not establish that they effectively seize and confiscate funds based on foreign requests.
- Extradition:
  - ML is an extraditable offense in relation to Council of Europe Member States and countries with which the Netherlands has bilateral or multilateral extradition treaties.
  - For all other countries, only ML cases involving transnational organized crime or corruption are extraditable offenses.
  - TF is an extraditable offense, but dual criminality shortcomings under Special Recommendation II may limit extradition in certain TF cases.

### Key statistics and factual findings
- “Presently, the proceeds of domestic crime are estimated at approximately $14 billion, or 1.8 percent of the GDP.”
- Netherlands ranking and financial sector systemic importance:
  - 16th economy in the world by nominal GDP.
  - 7th in terms of the systemic importance of its financial sector.
- FIU and institutional dates:
  - FIU first established in 1994.
  - FIU restructuring process occurred in 2006.
  - New governance model agreed in September 2010.
  - WWFT adopted in 2008.
  - AML/CFT preventive measures dating back to 1993.
  - Dematerialization of bearer shares will not be completed and fully effective until 2013.
- Reporting time frame:
  - 14-day period to report after a transaction has been established suspicious.

### Key assessor recommendations (summary)
- Strengthen legal framework for TF to create an autonomous terrorism financing offense aligned with FATF standards, addressing collection, financing covered by the FT Convention Annex, and financing of individuals beyond UNSCR/EC/Dutch designations.
- Complete and streamline FIU reorganization to restore operational independence, simplify governance, and ensure timely access to necessary information.
- Improve FIU analytical prioritization, dissemination practices (case-by-case), and emphasis on red flag–based analysis to better support LEAs and trigger ML investigations.
- Strengthen STR regime to ensure prompt reporting (address the 14-day delay) and improve reporting quality across financial institutions and DNFBPs, particularly insurance agents, life insurers, bureau de change, precious metals dealers, and lawyers.
- Address legal issues limiting supervision and preventive measures for lawyers and other DNFBPs, including secrecy provisions that hinder supervision.
- Amend the Criminal Procedure Code to enable assistance in searching and seizing evidence in ML cases for a broader range of predicate offenses and make ML an extraditable offense regardless of the predicate offense involved.
- Enhance CDD framework by:
  - Expanding definition and verification obligations for beneficial owners (including persons with ultimate effective control over legal arrangements).
  - Narrowing overly broad low-risk exemptions and the EU/EEA single-risk categorization for low-risk scenarios.
  - Removing the limitation that beneficial owner verification and ownership/control understanding apply only in high-risk scenarios.
  - Introducing an obligation to determine whether beneficial owners are politically-exposed persons.
- Strengthen internal control, compliance, employee training, and compliance officer role/seniority requirements across financial enterprises; clarify Wft obligations for internal controls.
- Improve supervisory guidance and training, update guidance to include monitoring obligations as well as CDD, and address sectoral supervisory weaknesses (insurance, securities, precious metals, accountants).
- Improve availability, accessibility, and currency of beneficial ownership information for legal persons and arrangements; complete bearer share dematerialization process.
- Maintain and publish statistics in important areas to demonstrate effective implementation of the AML/CFT legal framework.

*Source: IMF assessment text provided in content unit _cr1191 - 1.      Indicators suggest that the Netherlands is susceptible to money laundering (ML).*

### 1. Legal System and Related Institutional Measures

### 1. Legal System and Related Institutional Measures

### Criminalization of Money Laundering
- R.1 – LC
- R.2 – LC
- Recommendations:
  - Review all information available with respect to the fines and prison sentence imposed in ML cases to determine whether the sanctions regime is applied in a fully effective and dissuasive manner, including in relation to legal persons.
  - Maintain accurate statistics on the number of ML investigations and predicate offenses in relation to which the ML provisions are applied.

### Criminalization of Terrorist Financing
- SR.II – PC
- Recommendations:
  - Criminalize terrorism financing fully in line with the FATF standard as per Ministerial Commitment.
  - Ensure that FT activities are investigated and prosecuted effectively in the Netherlands, for example by establishing TF as a separate criminal offense in line with the UN Convention for the Suppression of the Financing of Terrorism.

### Confiscation, Freezing, and Seizing of Proceeds of Crime
- R.3 – LC
- Recommendation:
  - Ensure that access to appropriate information and documents held by lawyers and other legal professionals is available in all cases.

### Freezing of Funds Used for Terrorist Financing
- SR.III – LC
- Recommendations:
  - Provide more guidance to the private sector, especially the non banking financial industry and DNFBPs, on the freezing obligations stemming from the international standard, including the obligation to check client files and databases against those lists.
  - Ensure that all FIs, not only banks, are effectively monitored for compliance with the EC and Sanctions Regulations.
  - Extend the freezing obligations under UNSCR 1267 to funds and other assets owned or controlled ―indirectly‖ by a designated individual, entity, or organization.

### The Financial Intelligence Unit and its Functions
- R.26 – PC
- Recommendations:
  - Complete the legal framework concerning the FIU-Netherlands.
  - Implement a simplified governance model so that issues that affect the operational independence of the FIU are fully addressed.
  - Streamline financial analysis.
  - Reconsider the whole ―dissemination‖ system, with a view to emphasize a more streamlined provision of information to law enforcement, on a case-by-case basis.
  - Ensure that the FIU has timely and full access to all data it requires to properly undertake its functions.

### Law Enforcement, Prosecution and Other Competent Authorities
- R.27 – C
- R.28 – LC
- Recommendations:
  - The authorities should review the scope of professional secrecy and privilege obligations, and consider amending the CPP to improve the authorities’ ability to obtain documents and information, having regard to the possibilities enabled by the European treaties.
  - When conducting investigations of money laundering and underlying predicate offences, competent authorities should be able to obtain from lawyers, notaries, and tax accountants, documents and information for use in those investigations, and in prosecutions and related actions.

### Cross Border Declaration or Disclosure
- SR IX– LC
- Recommendations:
  - Establish TF as an autonomous offence, and extend Customs’ responsibilities also in this area.
  - Extend the requirements to cases where currency is shipped through containerized cargo and where currency or bearer negotiable instruments are mailed by a natural or legal person.
  - Consider enhancing Customs authorities powers to stop or restraint the currency, when there is a suspicion of ML and when the person has fulfilled the declaration requirements.
  - Improve the quality of the data shared with the FIU.

---

### 2. Preventive Measures: Financial Institutions

### Risk of Money Laundering or Terrorist Financing
(no explicit findings listed beyond R.5–R.8 ratings)

### Customer Due Diligence, including Enhanced or Reduced Measures
- R.5 – PC
- R.6 – PC
- R.7 – LC
- R.8 – LC
- Recommendations:
  - Clarify the issues related to the applicability of the CDD requirements envisaged by the WWFT (in particular those concerning beneficial ownership) to protected accounts opened prior to the entry into force of the updated Regulation on protected accounts.
  - Bring the definition of beneficial owner in line with the FATF standard (by referring it to the customer and by providing a reference to ―actual control’ also in the case of trusts and other legal arrangements).
  - Clarify the obligations to identify and to take reasonable measures to verify the ultimate beneficial owner and to understand the ownership and control structure of the customer in all circumstances regardless of risk.
  - Obligate financial institutions to determine whether the customer is acting on behalf of another person and to verify that a person purporting to act on behalf of the legal entity so authorized.
  - Provide further guidance on all CDD measures to financial institutions.
  - Address the exemptions for low-risk customers as adopted from the Third EC Money Laundering.
  - Oblige financial institutions to ensure that data and information obtained under the CDD process, such as the client risk profile and contact information, are kept up-to-date.
  - Repeal the transitional provision of the WWFT that deems the identification and record keeping requirements under the previous AML/CFT law as if it were duly fulfilled under the WWFT.
  - Require institutions to ascertain source of wealth and funds in all circumstances and not limited to business relations/transactions.
  - Review the PEP-related requirements to include non-Dutch PEPs resident in the Netherlands.
  - Introduce a requirement to obtain senior management approval to continue business relationship when a customer/beneficial owner becomes a PEP or is found to be a PEP during the course of an already established business relationship.
  - Extend the obligation for financial institutions to have risk based procedure to determine whether a customer is a PEP, also to the case of the beneficial owner.
  - Extend enhanced due diligence required to all non face-to-face relationships.
  - Reconsider the option envisaged by Article 8, para 2 c) of the WWFT, as it may not ensure effective CDD procedures in the case of non face-to-face transactions.

### Third Parties and Introduced Business
- R.9 – NC
- Recommendations:
  - Revise the obligation that is currently imposed on the third party to provide the information concerning the CDD process.
  - Introduce a requirement for financial institutions to satisfy themselves that a third party located within the EU and EEA is regulated and supervised (in accordance with Recommendation 23, 24 and 29), and has measures in place to comply with the CDD requirements set out in R.5 and 10. Alternatively, the authorities could consider conducting a thorough assessment of the supervisory framework and of the CDD measures in place in the concerned countries where the third parties are located and limit the location of third parties to those countries that have satisfactory supervisory framework and CDD measures.
  - Introduce enforceable requirements that place the ultimate responsibility for customer identification and verification with the financial institution relying on the third party.

### Financial Institution Secrecy or Confidentiality
- R.4 – C
- Recommendation:
  - Amend the WWFT (Article 22) to make explicit that supervisory authorities may share information collected for the purpose of Article 24 with other domestic authorities and foreign supervisors.

### Record Keeping and Wire Transfer Rules
- R.10 – LC
- SR.VII – C
- Recommendations:
  - Remove the ambiguity created by the different and conflicting record-retention provisions in the AW, BWR, WWFT, and Wft and make explicit that the record-retention requirements (including those in the BW and AWR) necessarily apply to all transactions and to business correspondence, account files, customer identification on all legal persons and arrangements and beneficial owners.
  - Ensure that records of transactions are maintained in a way that permits reconstruction of transactions for the purpose of prosecution and give the authorities powers to extend record retention requirements in particular cases.
  - Extend the record keeping requirement in the BPR Wft and BGFO Wft to all financial services categories identified in the Wft.

### Monitoring of Transactions and Relationships
- R.11 – LC
- R.21 – PC
- Recommendations:
  - Streamline the legislative and regulatory framework, eventually by introducing a separate obligation for all financial institutions to pay special attention to all complex, unusual large transactions, or unusual patterns of transactions that have no apparent or visible economic or lawful purpose, autonomous from the obligation to report suspicious transactions.
  - Introduce an explicit obligation for financial institutions to examine as far as possible the background and purpose of unusual transactions.
  - Consider re-introducing the practice of issuing detailed circulars to financial institutions after each FATF Plenary.
  - Introduce an enforceable obligation for financial institutions to give special attention to business relationships and transactions with persons from or in countries which do not or insufficiently apply the FATF Recommendations.

### Suspicious Transaction Reports and Other Reporting
- R.13 – LC
- R.14 – PC
- R.19 – C
- R.25 – C
- SR.IV – LC
- Recommendations:
  - Ensure that suspicious transactions are reported promptly to the FIU.
  - Enhance the effectiveness of the reporting system, including by raising awareness of financial institutions on the detection of suspicious transactions.
  - Ensure that protection from criminal liability only applies if suspicions are reported in good faith.
  - Extend the tipping-off prohibition to apply to directors, officers and employees and to cover cases where transactions are being reviewed internally to determine whether an STR should be filed.
  - The authorities are recommended to reconvene the Article 21 Committee or the Indicators Working Group to establish with the representatives of the reporting institutions how best to disseminate the analysis that is currently produced.
  - They are further recommended to consider issuing alerts to institutions when new information is available on the FIU web site.

### Internal Controls, Compliance, Audit and Foreign Branches
- R.15 – PC
- R.22 – PC
- Recommendations (amendments to WWFT, Wft, and Wgt):
  - Amend the Wft to clarify that the policies, procedures and controls required by the Wft must apply to the implementation of the obligations in the WWFT.
  - Amend the WWFT to include a direct requirement to train staff, on a regular basis.
  - Amend the Wft and Wgt to create a requirement for all regulated entities to have a compliance officer with adequate seniority access to management and resources.
  - Amend the Wft or implementing regulations to require screening of all employees to ensure high standards.
  - Amend the Wft or implementing obligations to apply the ongoing obligations on internal controls, compliance units, internal audit, training, and employee screening to all regulated financial entities covered by the WWFT.
  - Amend Article 2(1) of the WWFT (or provide in implementing regulations) to ensure that regulated entities with foreign branches and subsidiaries (in all countries, including EU and EEA Member States) should apply all AML/CFT measures (not just CDD) that are equivalent to Dutch standards or applying local standards where these are higher; and that apply Dutch standards in countries which do not or which insufficiently apply FATF Recommendations.

### Shell Banks
- R.18 – C
- Recommendation:
  - The authorities are recommended to amend Article 8(3) of the WWFT so that it applies to all correspondent banks, including those in the EU and EEA.

### Supervisory and Oversight System – Competent Authorities and SROs
- R.17 – LC
- R.23 – LC
- R.25 – LC
- R.29 – LC
- Recommendations:
  - The authorities should collect more comprehensive and detailed data by sector and by year, on the use of their inspection and enforcement powers with respect to AML/CFT matters and on the nature of the weaknesses being identified, so as update their understanding of ML and TF risks and to satisfy themselves that appropriate and effective action is taken in this area.
  - The AFM should review their approach to AML/CFT and increase their focus on monitoring the procedures put in place by regulated entities to detect and deter ML and FT and should implement increased monitoring of CDD practices by the large number of smaller businesses that are brokers.
  - The staff training program should be reviewed to ensure that each member of staff receives adequate training on AML/CFT and comprehensive data should be maintained on this.

### Money Value Transfer Services
- SR.VI – LC
- Recommendations:
  - The DNB is recommended to review its advice to the money transfer offices on reporting on the basis of the subjective indicator, in consultation with the FIU, so as to maximize the value of the reporting system and seek a level of reporting that accurately reflects the presumption of money laundering.
  - The authorities are also recommended to apply the provisions of Article 3:99 Wft to payment services providers, so that the owners may be subject to fit and properness tests.

---

### 3. Preventive Measures: Non-Financial Businesses and Professions

### Customer Due Diligence and Record-Keeping
- R.12 – PC
- Extend the scope of the CDD requirements to:
  - both the buyer and the seller of a transaction performed by a real estate agent;
  - the services designated by the WWFT for lawyers and notaries, when related to the first meeting with the client. This requirement should be set out in primary or secondary legislation;
  - TCSPs when providing a registered office; business address for a company, a partnership or any other legal person or arrangements, when this service is provided on a standalone basis.
- With respect to Recommendation 5:
  - All DNFBPs: Provide further guidance on all CDD measures.
  - All DNFBPs (except TCSPs): The recommendations made in section 3 for financial institutions also apply to TCSPs: Adopt measures consistent with the standards regarding the identification of the customer other than the beneficial owner and enhanced due diligence.
- With respect to Recommendation 10:
  - All DNFBPs (except TCSPs): Remove the ambiguity created by the different and conflicting record-retention provisions in the AW, BWR and the WWFT, and make explicit that the record-retention requirements necessarily apply to all transactions and to business correspondence, account files, customer identification on all legal persons and arrangements and beneficial owners.
  - TCSPs: Ensure that record keeping requirements on information on the customer (if different from the beneficial owner) and business correspondence, are kept for five years from the date the relationship with the customer ceases.

### Suspicious Transaction Reporting
- R.16 – PC
- With respect to Recommendation 13:
  - Extend the scope of the reporting requirement to:
    - both the buyer and the seller of a transaction performed by a real estate agent;
    - TCSPs for providing a registered office; business address for a company, a partnership or any other legal person or arrangements, when this service is provided on a standalone basis.
  - Ensure that suspicious transactions are reported promptly to the FIU.
  - Enhance the effectiveness of the reporting system.
- With respect to Recommendation 14:
  - The recommendations made in section 3.7 for financial institutions also apply to DNFBPs.
- With respect to Recommendation 15:
  - All DNFBPs (except TCSPs):
    - Require DNFBPs to develop internal policies, procedures and controls (except lawyers).
    - Require DNFBPs to establish an appropriate ongoing employee training.
    - Introduce the requirement of an independent audit function to test compliance with the procedures, policies and controls.
  - TCSPs:
    - Introduce the requirement of an independent audit function to test compliance with the procedures, policies and controls.
- With respect to Recommendation 21:
  - The recommendations made in section 3.6 for financial institutions also apply to DNFBPs.

### Regulation, Supervision, Monitoring, and Sanctions
- R.24 – PC
- R.25 – PC
- Recommendations:
  - Ensure that lawyers are subject to an effective system for ensuring compliance with AML/CFT requirements.
  - Increase the effectiveness of the measures in place concerning illegal internet casinos that have their mind and management in the Netherlands.
  - Increase effectiveness in the monitoring of precious metals dealers, lawyers and accountants.
  - The FIU should provide DNFBPs with a more specific feedback on reported transactions.

### Other Designated Non-Financial Businesses and Professions
- R.20 – C
- There are no recommendations with regard to this Recommendation.

---

### 4. Legal Persons and Arrangements & Nonprofit Organizations

### Legal Persons – Access to Beneficial Ownership and Control Information
- R.33 – PC
- Recommendations:
  - Information on ultimate beneficial owners of Dutch legal persons should be accessible and up-to-date in all cases.
  - The dematerialization process of bearer shares should be completed as soon as possible to ensure that such instruments issued by Dutch NVs are not abused for ML or TF purposes.

### Legal Arrangements – Access to Beneficial Ownership and Control Information
- R.34 – PC
- Recommendations:
  - The definition of the ―beneficial owners‖ as contained in the WWFT should extend to ―the natural person(s) who ultimately owns or controls a legal arrangement.‖
  - For trusts not administered by a Dutch FI or DNFBP, put in place additional measures to ensure that timely, accurate, and complete beneficial ownership information is available in all cases.

### Nonprofit Organizations
- SR.VIII – LC
- Recommendations:
  - For NPOs outside of the CBF’s seal mechanism undertake outreach initiatives to enhance NPO’s awareness about the risks of terrorist abuse.
  - Develop coordination and information exchange mechanisms that involve the CBF to facilitate the effectiveness of the supervisory framework.

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### 5. National and International Cooperation

### National Cooperation and Coordination
- R.31 – LC
- Recommendations:
  - Make greater use of existing coordination bodies and, if appropriate, combine some of the bodies so as to focus the resources of the participating parties.
  - Encourage the supervisors and the FIU to make greater use of the information on reporting patterns and to consider benchmarking the Dutch experience against that of other countries so as to establish a risk-based awareness program to tackle those sectors where reporting is minimal.
  - Make greater use of the private sector’s desire for greater feedback from the FIU so as to maximize the value of the reporting process.

### The Conventions and UN Special Resolutions
- R.35 – PC
- SR.I – PC
- Recommendations:
  - Implement fully the Vienna and Palermo Conventions.
  - Implement fully the CFT Convention, in particular by addressing the shortcomings identified in SR II.
  - Address the shortcomings identified in relation to the implementation of UNSCRs 1267 and 1373.

### Mutual Legal Assistance
- R.36 – PC
- R.37 – LC
- R.38 – PC
- SR.V – PC
- Recommendations:
  - Ensure that assistance in searching and seizing of evidence can be provided in all ML cases and in relation to any requesting country.
  - Address all shortcomings identified under Special Recommendation II.
  - Ensure that access to information held by notaries, lawyers and accountants can be granted in all cases, including in the context of MLA.

### Extradition
- R.39 – PC
- R.37 – LC
- SR.V – PC
- Recommendations:
  - In relation to non-Council of Europe members and countries with which the Netherlands have not signed a multilateral or bilateral extradition treaty, ML should be an extraditable offense in all cases, including drug related cases.
  - Address all shortcomings identified under Special Recommendation II.
  - Set out a legal obligation by Dutch authorities to prosecute a suspect domestically in cases where an extradition request for ML is denied purely on the basis of nationality.

### Other Forms of Cooperation
- R.40 – LC
- SR.V – PC
- Recommendation:
  - The authorities should review the scope of professional secrecy obligations and consider amending the CPP to make sure that it does not subject exchange of information to unduly restrictive conditions.

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### 6. Other Issues

### Resources & Statistics
- R.30 – LC
- R.32 – LC
- Recommendations:
  - Staff training should be required on an annual basis and sufficient data on the nature of training received by supervisory staff should be kept.
  - Accurate and complete statistics should be maintained on:
    1. the number and types of predicate offenses committed in the Netherlands;
    2. the number of investigations conducted for ML and FT;
    3. the types of predicate offenses involved in ML prosecutions and convictions;
    4. the number of ML and TF investigations in which assets were seized and the amounts seized in each case;
    5. the total amounts requested to be seized and eventually realized in each case should be maintained;
    6. the number of MLA requests received and granted in ML and TF cases in relation to the seizing and confiscation of assets and the total number of assets seized and confiscated based on foreign request;
    7. the number of extradition requests received in ML and TF cases and the number of cases rejected and granted as well as the time required to complete extradition proceedings.

*Source: _cr1191 - 1. Legal System and Related Institutional Measures*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2011/_cr1191.pdf_