Material changes proposed to the Dutch AML Act

What is this about?

On 21 October 2022, the Dutch Minister of Finance submitted the Dutch Anti-Money Laundering Action Plan Act (the Action Plan Act) to Parliament (Tweede Kamer) for adoption.

This legislative proposal (available here (in Dutch only)) looks to amend the Dutch Anti-Money Laundering and Anti-Terrorism Financing Act (the AML Act). Some amendments may result in material changes to the way firms currently organise their AML procedures.

Which parties should care?

Among others, banks, investment firms, payment service providers, fund managers and crypto service providers active on the Dutch market. So basically all firms that are already in scope of the AML Act.

What should they know?

Following the public consultation of the draft Action Plan Act on 2 December 2019, on 21 October 2022 the Minister of Finance submitted the draft legislation to Parliament for adoption. This draft has been amended following criticism of the Dutch Council of State (Raad van State), which was published on 16 June 2022 (available here). The proposed amendments to the AML Act include:

• enabling the exchange of data between firms within the same firm category (eg banks among banks etc.) in relation to customer due diligence in case of a higher risk of money laundering or terrorist financing;
• allowing the joint monitoring of transactions by banks; and
• further clarification on the use of special categories of personal data and personal data relating to criminal matters in relation to a firm’s obligations under the AML Act

In relation to the first item, it is worth noting that firms will be required to investigate whether a (potential) client receives or has received services from a firm within the same category, or has been declined by such other firm. This requirement only applies where it concerns a high risk client or enhanced due diligence must be carried out on another basis. Finally, this is a best efforts requirement.

When does this become relevant?

It is currently unclear whether Parliament will adopt the draft legislation and, if so, when it will enter into force.

Any further thoughts?

Although the Action Plan Act as submitted to Parliament intends to address the criticism of the Council of State, it still allows for joint transaction monitoring by banks whilst the Council of State advised to remove this possibility.

The ability for banks to perform joint transaction monitoring via a specialised vehicle currently does not exist in any other jurisdiction. It must therefore be demonstrated in practice whether this measure will indeed be as effective as the Dutch legislator expects it to be.

Additionally, it is yet to be seen whether the privacy concerns of, among others, the Data Protection Authority (Autoriteit Persoonsgegevens) are sufficiently addressed in the Action Plan Act as submitted to Parliament.