Instruction for Erez Corporate Service B.V. for various shortcomings in performing its gatekeeper role

Gatekeepers 

Tackling money laundering is a priority for the government because it is key to effectively fighting all manner of serious crime. The Act on the Supervision of Trust Offices (Wet toezicht trustkantoren 2018 – Wtt 2018) aims to reduce integrity risks in trust services. There is a risk that trust services could be misused for money laundering, terrorist financing or other socially improper behaviour. Pursuant to the Wtt 2018, trust offices act as gatekeepers and are required to design their business operations so that they can effectively identify and manage integrity risks. To do so, it is important that trust offices know who their customers are, where the customers’ money comes from and why these customers need the trust office’s services. It is also important that the trust office has an effective ongoing monitoring process in place so that it can detect and report unusual transactions to the Financial Intelligence Unit (FIU-NL) in a timely manner. In addition, the trust office must ensure sound and ethical business operations and, in that context, periodically analyse risks to ethical operational management. The trust office must also have a procedures manual containing procedures regarding compliance with the Wtt 2018, the Anti-Money Laundering and Anti-Terrorist Financing Act (Wet ter voorkoming van witwassen en financieren van terrorisme – Wwft) and the Sanctions Act (Sanctiewet 1977 – Sw) and related regulations. Erez failed to fulfil its legal obligations to conduct proper customer due diligence, nor did it have a robust SIRA or procedures manual.      

Customer due diligence, SIRA, compliance programme, procedures manual and audit function  

DNB examined several of Erez’ customer files. In all the files examined, DNB found that Erez did not carry out sufficient customer due diligence. The shortcomings revealed during the examination relate to establishing the customer’s integrity risk profile, the origin of the object company's assets, the asset position of the ultimate beneficial owner (UBO), establishing a transaction profile and conducting continuous monitoring of the customer and the purpose of the structure. As a result, Erez did not sufficiently identify and mitigate significant integrity risks. This put Erez at risk of its services being misused for money laundering, terrorist financing, tax evasion or other crimes.

DNB also found that Erez did not have a risk-based compliance programme. In addition, DNB found that the SIRA was too generic and not sufficiently geared to Erez’ specific circumstances, meaning that certain integrity risks were not recognised, and/or known integrity risks were not mitigated by policies, procedures and measures. DNB also concluded that Erez’ procedures manual did not provide adequate procedures with regard to compliance with the Sanctions Act and related regulations. Finally, DNB found that for 2016 and 2017, Erez failed to ensure that the audit function was exercised effectively. For the 2018 calendar year, Erez did not conduct an audit at all. DNB considers these instances of non-compliance to be serious, as they meant Erez failed to ensure ethical operational management.   

Instruction 

DNB’s enforcement approach is primarily aimed at promoting compliance with the law. In issuing the instruction to Erez, DNB took into account that a formal measure was appropriate in view of the severity, number and duration of the instances of non-compliance detected. DNB found an instruction appropriate to compel Erez to remediate its non-compliance with the law. The prescribed course of action in the instruction entailed that Erez had to bring all customer files verifiably into compliance with the relevant provisions of the Wtt 2018 by 3 December 2021 at the latest (extended to 28 February 2022). Erez was also required to have a risk-based compliance programme, a robust SIRA and a robust procedures manual by 3 September 2021 (extended to 3 December 2021). Finally, Erez had to ensure that the audit function was independently exercised by 3 September 2021 and Erez had to conduct an audit for the 2020 calendar year by 3 October 2021.

Objection and appeal

Erez lodged an objection to the instruction. On 31 January 2022, DNB declared the objection unfounded. Erez then appealed the decision on the objection. On 7 October 2024, the court dismissed the appeal as unfounded. The statutory six-week period for lodging a further appeal has now expired and no further appeal has been lodged, making the instruction, decisions to implement a change and the decision on objection irrevocable. 

Read the full instruction, the decisions to implement a change and the decision on the objection below (in Dutch), excluding confidential information. For further information, please contact DNB’s Information Desk at telephone number 0800 - 020 1068 (free of charge) or +31 20 524 9111 (if calling from abroad). 

Current status

The table below shows the current status of this decision.