The Money Laundering and Terrorist Financing (Prevention) Act (Wwft) is designed to prevent people and companies from laundering money or spending money on terrorist activities. The Act came into effect on 1 August 2008 and is designed to promote ‘clean’ business transactions. The government sees it as a key instrument in the battle against organised crime. This Wiki explains the Wwft.
The Wwft was mainly based on the ‘Disclosure of Unusual Transactions (Financial Services) Act’, but goes one step further in that it focuses both on the persons involved in suspect transactions and the risk of such transactions. Additionally, the ‘Provision of Services (Identification) Act’ is incorporated in the Wwft.
Based on the term ‘institution’, Section 1 of the Wwft lists the parties subject to this Act. These include banks, insurers, investment institutions, administrative service providers, accountants, tax consultants, trust offices, solicitors and civil-law notaries. Here is the up to date overview of institutions subject to disclosure maintained by the Financial Intelligence Unit, better known as FIU Netherlands.
Financial service providers must check the identity of their customers and check who is the ‘ultimate beneficial owner’ of a transaction. They must then check for any sanctions against this beneficiary or if the beneficiary has been the subject of negative publicity. Furthermore, institutions subject to mandatory disclosure must report any ‘unusual transactions’ to FIU Netherlands. This concerns transactions for which certain indicators apply. FIU assesses whether or not a transaction is suspect, and may then forward it to intelligence departments. Here you can download the ePaper containing best practices or read a blog here about compliance with Wwft in 10 steps.
Wwft compliance is monitored by DNB the Dutch Central Bank (DNB), the Financial Market Authority (AFM), the Financial Supervision Office and the Tax Authority’s Wwft Supervision Office.
Any institutions subject to mandatory disclosure which do not forward unusual transactions and any companies which do not correctly perform the mandatory identity checks risk a substantial fine or non-compliance penalty, with possible criminal proceedings.
The provisions of the Wwft have been amended several times and another amendment is pending. This time, the amendment is based on the introduction of the 4th European anti-money laundering directive. The details of the amendment are as yet unknown. However, football firms and other companies associated with professional sports are currently being considered for inclusion in the scope of the Act. Privacy aspects and the gambling sector are two other focal areas and the proposal is to have any business transactions based on cash payments within its scope too. The imminent amendments can be expected to have major consequences for companies subject to mandatory disclosure.
Compliance with the Wwft is a labour intensive process for most companies. However, there are several options which can lessen the load. There are automated solutions for checking the identity of the ‘ultimate beneficial owner’ of a transaction, for example. This offers many benefits, such as reducing time and human error. Furthermore, the software changes along with the amendments. That ensures continuous compliance with the rules, preventing fines and loss of reputation. Graydon offers customer due diligence as an automated solution, for example. This software can be installed for you and if necessary integrated into your in-house credit risk process. This ensures that:
Prior to automating your due diligence policy, Graydon enriches, analyses and screens your full portfolio to create a ‘clean slate’.