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In some cases, financial service providers such as banks, insurance companies, civil-law notaries or tax consultants in the Netherlands, must investigate their clients and other parties concerned in order to confirm their identities. These cases are stipulated in the Prevention of Money Laundering and Terrorism Financing Act (Wet ter voorkoming van witwassen en het financieren van terrorisme, Wwft). You should investigate:
- Before you conduct a sales transaction or mediation project
- Before closing a business deal with your client and providing them with services
Types of investigation
Clients wishing to use your financial services must prove their identity. You must check their identity details and record them for at least 5 years. Furthermore, you must also establish the ultimate beneficial owner (UBO) of the service you provide, for instance by verifying who the actual directors or shareholders of a company are. You can do three types of investigation:
- Normal (checking identity, type and aim of the assignment, finding out if the client acts for themselves or for someone else)
- Simple, for transactions with a low risk of money laundering or financing terrorism
- Comprehensive, if the client is settled in a state that has been signalled as high-risk for money laundering and financing terrorism by the European Commission, or if they are (related to) prominent political figures
You make your own risk assessment, based on your client’s background and the type of service they are requesting. You can use the recommendations from FIU-Netherlands for setting up your client investigation.
Unusual and cross-border transactions
Appraisers do not have to conduct a client investigation, but they should report unusual transactions. Are you an estate agent or immovable goods mediator? You should also investigate the party your client partners up with for your assignment.
If you work as an intermediary (such as accountant or tax consultant), from 1 January 2021 you have to report any cross-border constructions that you believe are set up to avoid taxes to the Dutch Tax and Customs Administration (Belastingdienst). This is a result of the European Mandatory Disclosure Rules (MDR)/DAC6. You will have to provide information on any relevant constructions dating back to 25 June 2018. If you know of any cross-border constructions set up to avoid tax and you don't report it, you may be fined or prosecuted.