In recent years, Dutch banks have strengthened their capital buffers. Four years ago, the largest Dutch banks were expected to need additional capital to meet the minimum standards set out in the Basel Accord.Read more
Combating money laundering and fraud
Suppose you want to open a new bank account or take out insurance. Then the bank or insurer will ask you for a lot of information. This is to prevent money laundering and criminal money flows. De Nederlandsche Bank monitors whether financial institutions do enough to prevent money laundering.
Money laundering and illicit money
People who possess illicit money will want to convert it into assets that appear legal. That is what we call money laundering. Illicit money is, for example, money obtained from theft or another crime, or money that you should have paid to the tax authorities. It is estimated that laundering illicit money accounts for around €13 billion in the Netherlands annually. Financial institutions are doing their best to prevent this.
Money laundering and the law
Money laundering is a criminal offence according to the law. Banks, insurers and other financial institutions are legally obliged to prevent money laundering. . They must comply with the rules set out in the Anti-Money Laundering and Anti-Terrorist Financing Act (Wet ter voorkoming van witwassen en financieren van terrorisme). As the supervisory authority, we see to it that financial institutions comply with these rules and prevent money laundering.
Supervision of the fight against financial crime
Every major money laundering scandal affects confidence in the financial sector, and the social costs are high. After all, laundered money is used to finance criminal activities. This makes our society more unsafe and undermines the rule of law. For this reason, combating financial crime such as money laundering is one of our priorities. Because prevention is better than cure. We check whether institutions have set up their policy and procedures in such a way that they can prevent money laundering as best they can.
Measures preventing money laundering
Banks, insurers and other financial institutions are doing a lot to block flows of illicit money. For example:
- they perform customer due diligence: the know-your-customer principle
- they monitor cash transactions
- they identify and report all unusual transactions as soon as possible
Know your customer: asking for information
If you want to open an account, a bank will ask you all kinds of questions. And insurers do the same when you want to take out a new insurance policy. They must investigate the information you provide because they have to separate customers with honest intentions from those with bad intentions. However, that does not mean they can just ask anything. In addition, they need certain information from you to properly assess your risks. So they must be able to explain to you why this data is needed. A bank or insurer may decide not to do business with a customer because there are too many risks.
If you want to transfer much more money than you normally do, the bank may contact you for more information. Banks must monitor all transactions, and they must identify and report all unusual transactions to the Financial Intelligence Unit (FIU-NL). This reduces the risk of criminals taking advantage of a bank to launder money.
Money laundering scandals and fines
Despite all the efforts of financial institutions, things sometimes go wrong. A questionable transaction is overlooked, or a bank may not be aware of a customer's malicious intentions. This may mean that a bank has made it possible to launder illicit money. If this happens because the bank does not have its procedures in order we can take measures, such as imposing a fine. Sometimes a case is also submitted to the Public Prosecution Service (PPS), which may launch a criminal investigation. If the investigation shows that things have gone awfully wrong, the PPS may impose a fine or make a settlement. This can involve huge sums of money. Such big money laundering scandals usually attract a lot of press coverage, which harms trust in the financial sector.
Efforts and costs
Financial institutions are doing more and more to prevent money laundering. That takes a lot of time, energy and money. They pass on some of the costs of these efforts to their customers. In this way, we are all helping to combat money laundering. As a supervisory authority we also make efforts to combat money laundering and in doing so foster trust in the financial sector.
Frequently asked questions
The law stipulates that banks and other financial institutions must know who their customers are and understand what types of payment their customers make. This requirement applies to private customers, but also to businesses and other organisations. It is known as the know-your-customer (KYC) principle. It helps financial institutions prevent being misused for criminal purposes or for other acts that could undermine the confidence which customers have in them.
We check that banks and other financial institutions, such as payment service providers, meet the obligations which they have under the know-your-customer principle. This is part of our supervision of their compliance with the Financial Supervision Act (Wet op het financieel toezicht – Wft) and the Anti-Money Laundering and Anti-Terrorist Financing Act (Wet ter voorkoming van witwassen en financieren van terrorisme – Wwft).
It is up to your bank to explain why it is asking you for these data. It may need the information to meet obligations arising from the know-your-customer principle under the Wwft and the Wft, or it may need certain data, such as your citizen service number (BSN), to comply with tax laws. If you refuse to provide them, your bank may be unable to meet its legal obligations. It could decide to terminate its relationship with you as a result.
You must provide details of your identity to your bank, while the bank must verify their accuracy. The Government of the Netherlands website provides more information about identity documents valid in the Netherlands. Your bank may make or ask you to provide a copy of your identification document so that it can prove it complies with the know-your-customer principle.
It is up to your bank to explain why it needs this. It may be because the bank needs to keep your data up to date to ensure compliance with obligations arising from the know-your-customer principle.
The Dutch Data Protection Authority (AP) monitors compliance with privacy legislation in the Netherlands by businesses such as banks. The AP website (Dutch only) contains information on personal data that banks may request and on their handling of identification documents. If you have any further questions about Dutch privacy law, please contact the AP.
You can contact various banks to open an account. Our public register lists the banks that operate in the Netherlands. Alternatively, you can open a basic bank account. Information in Dutch is available on this website. Remember that all banks must adhere to the know-your-customer principle and can therefore ask you for personal data.
Discover related articles
On 21 April 2020, the law was passed under which crypto service providers are subject to the integrity supervision of De Nederlandsche Bank. The new legislation is expected to enter into force on 18 May 2020. DNB calls on crypto service providers to apply for registration before that date...Read more