Dutch Banks Face Larger Fines, Public Scrutiny for AML Violations

The House of Representatives, the lower house of the Netherlands’ legislature, overwhelmingly voted in favor of amending the Law to Prevent Money Laundering and Terrorist Financing to raise the ceiling for AML-related penalties to 20 percent of an offending bank’s annual turnover if the violation in question occurred within five years of a previous enforcement action.

The legislation would also allow the Dutch Central Bank to name financial institutions subject to enforcement actions and outline the nature and circumstances of their violations in the same manner as U.K., Irish and U.S. regulators.

“Publishing enforcement actions is going to hit the bank concerned harder, but at the same time it allows you to send a message to the sector about what the required standard is and what the regulator is focusing on,” Remy Jansen, head of the central bank’s integrity department, told ACAMS moneylaundering.com.

Based on recent annual turnover, which the Bill defines as “net turnover of the offender in the financial year preceding the penalty,” the largest banks in the Netherlands could incur fines of billions of euros for repeated AML failures if the Bill becomes law. The Dutch Senate does not have power to amend the Bill but can use its rarely-applied discretion to block its passage.

The central bank issued seven fines totaling €1.8 million against banks in 2016, the most recent year for which comprehensive data is available, but the regulator is currently barred from disclosing whether any of the penalties relate to AML or sanctions violations.

“With a fine of 10 percent you sigh and carry on, [but] with a fine of 20 percent you’re out of the game for the time being,” Roald van der Linde, a member of the ruling party who drafted the amendment, told lawmakers last month. “That is exactly the intention.”

The legislation would also go far in bringing the Dutch AML regime in line with the European Union’s Fourth AML Directive by requiring banks to maintain up-to-date assessments of their financial crime risks, conduct extensive background checks on domestic politicians and determine whether other clients require enhanced due diligence.

Dutch officials will launch a consultation at the end of the month on separate legislation to establish a national register of beneficial owners of legal entities and trusts—another 4AMLD requirement.