09 September 2022
A more risk-based approach will sharpen the focus of efforts to keep the financial sector free from financial crime. Such an approach will also reduce the undesirable side effects of the gatekeeper role of banks and other financial institutions, such as the unnecessary refusal or exclusion ('de-risking') of customers from payment systems.
De Nederlandsche Bank (DNB) reports on this in a study published today entitled "From recovery to balance". DNB supervises the financial sector for compliance with the Anti-Money Laundering and Anti-Terrorist Financing Act (Wet ter voorkoming van witwassen en terrorismefinanciering – Wwft). In recent years, DNB has identified serious Wwft compliance shortcomings in the sector.
Questions raised about efficiency
Various institutions are engaged in remediation processes to restore compliance, which has entailed substantial costs for the banking sector. This has raised questions about the effectiveness of the approach taken, and about the measures in place that restrict access to financial services for certain high-risk customers or groups of customers.
Improved customer risk assessment
In order to achieve a more risk-based approach, banks must improve their customer risk classification processes. More limited scrutiny in the case of low-risk customers will allow for greater capacity and attention to be focused on higher-risk customers. For its part, DNB, as the supervisory authority, will assist institutions in various ways, including by providing additional guidance on levels of scrutiny that are appropriate for low-risk customers.
Greater use of technologically innovative solutions
Technologically innovative solutions can also be used more broadly, if necessary in consultation with the legislature, to sharpen the focus of the fight against money laundering. For example, machine learning can be used for customer risk classification and for transaction monitoring, provided that adequate safeguards are in place with regard to privacy, bias and explainability. Enabling customers to reuse data they must submit to multiple institutions, for instance by means of electronic identification, can also reduce the administrative burden they face.
Strengthening the stakeholder chain
In addition, initiatives are underway to strengthen the effectiveness of the chain of parties involved in combating money laundering. More robust coordination and prioritisation between stakeholders is key in this regard. This includes working together to improve the reporting of unusual transactions by focusing on transactions that are in fact suspicious, rather than just unusual.
In the coming months, DNB will be holding a series of round table sessions with representatives from the financial sector and other stakeholders to discuss the main bottlenecks and areas where additional guidance can help smooth the way going forward.
End of press release
For more information, please call Tobias Oudejans at +31 (0)6 - 524 96 961).