Combating money laundering and fraud

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.

Unusual transactions

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.