Draft anti-money laundering legislation has been submitted to the lower house in the Netherlands: (i) limiting cash handled by traders in goods to EUR 3,000, (ii) enabling banks to outsource transaction monitoring and (iii) requiring AML-regulated institutions to exchange client information in high-risk situations.
Outsourcing transaction monitoring
Currently, all client due diligence except for transaction monitoring may be outsourced. The proposed anti-money laundering action plan will allow banks to outsource monitoring to Transactie Monitoring Nederland (TMNL). Banks remain responsible for AML compliance and for reporting unusual transactions to the Financial Intelligence Unit – Netherlands (FIU). They must also continue to comply with the General Data Protection Regulation (GDPR). AML-regulated institutions that are not banks are not permitted to outsource monitoring.
The new outsourcing procedure will be evaluated by an independent auditor one year after the implementation of this new bill. This evaluation will become publicly available.
Mandatory exchange of information
Before entering into a new business relationship with a high-risk client, all AML-regulated institutions must consult other AML-regulated institutions in the same category (banks to banks, lawyers to lawyers) if they are conducting business activities for or have refused to start a business relationship with that client.
AML-regulated institutions have a best-efforts obligation to check whether the new high-risk client has spoken to or is a client of other AML-regulated institutions. After entering into a business relationship with a high-risk client, the institution may (but does not have to) contact the other institution(s). Each institution must provide the other institution with the information requested.
The proposed legislation introduces an exception to legal privilege for lawyers admitted to the Netherlands Bar and civil law notaries. As a result, lawyers and civil law notaries must also consult other lawyers or civil law notaries before starting a business relationship with high-risk clients.
Clients must be informed about the exchange of information between AML-regulated institutions. These information requirements may be included in the institution's general conditions or engagement letter.
Limitation on cash transactions
Cash transactions conducted in or from the Netherlands which exceed an amount of EUR 3,000 are prohibited for: (a) traders in goods and services, (b) buyers or sellers of works of art in the course of their business or profession, and (c) pawnbrokers. This threshold applies to transactions between professionals or between professionals and consumers. There is no cash limit for transactions among consumers.
The new anti-money laundering action plan, or a certain part of it, is expected to enter into force in early 2023. After this, the obligation to provide information to other AML-regulated institutions will arise as soon as a business relation with a high-risk client has been established or refused.