Dutch banks loosen anti-money laundering investigations of politically-exposed persons
Banks in the Netherlands will soon modify their approach how they monitor a politically-exposed person (PEP) with regard to how financial institutions combat money laundering and the funding of terrorism. Dutch banks will be encouraged to be more focused on an individual banking customer’s actual risk profile during investigations, and to be less invasive unless a situation calls for it, the Dutch Banking Association (NVB) announced this week.
The NVB worked with the Dutch central bank, DNB, and the Ministry of Finance to determine that different politically-exposed individuals may be confronted with differing degrees of corrupt behavior, depending on their position. The NVB said that banks can act in a more measured manner based on proportionality of risks noting an example that a customer might present a low risk of money laundering, in which case an assessment can utilize already available and current information.
“The research must also focus on the customer and not on third parties. In this way, banks can limit unnecessary requests for information and documentation and reduce the impact on customers,” the NVB said.
The Dutch law governing anti-money laundering policy and the fight against terrorism financing, known as Wwft, already has provisions requiring banks to increase their due diligence when dealing with a PEP. “The risks related to PEPs consist of the fact that they may be in a position to abuse their public office for private gain and may use the financial system to launder the proceeds of this abuse of office,” the NVB explained.
“Because of their function they may have access to public funds, control over public tendering and the allocation of public works to the private sector. This makes PEPs vulnerable to bribery and corruption.”
The association explained that the term, politically-exposed person, first became popularized in the finance world about two decades ago. “The international anti-money laundering organization Financial Action Task Force (FATF) noted that high-ranking political positions are vulnerable to bribery and corruption. The reason was a corruption scandal in Nigeria that resulted in billions of dollars being withdrawn from the state treasury.”
The Netherlands has been part of the multinational task force since 1990. “The measures that the FATF took to prevent this initially only applied to foreign PEPs. In 2018, the Tweede Kamer decided to also give domestic politicians and authorities the status of PEP,” the Dutch Banking Association said.
