The Sanctions Act (officially: 1977 Sanctions Act) imposes legal requirements on financial and other institutions to ensure their integrity, combating undesirable trade, money laundering and terrorism. With this Act, the Netherlands enforces international sanction regimes on a national level, including United Nations and European Union sanctions. Organisations that fall under the Act must identify their relations and implement suitable measures if these relations are on a sanction list and are therefore suspect. Due to the complex nature of this legislation and the communication of requirements, this Wiki sets out the key issues you should know about the Sanctions Act.
The Dutch Central Bank (DNB) and the Netherlands Authority for the Financial Markets (AFM) supervise compliance with the Sanctions Act. This is based on the 1977 Sanctions Act Supervision Regulation, which stipulates that financial and other institutions must check whether their relations are on the sanction lists of EU regulations, decrees of their Foreign Ministry or resolutions of the United Nations Security Council. DNB mainly assesses whether or not the measures taken are adequate.
If a relation turns out to be suspect, various financial sanctions may apply. The European Union regulations provides the following sanctions:
A fine or administrative penalty may be imposed on an organisation in non-compliance with the Sanctions Act. Criminal proceedings are another option. In June 2014, the French bank BNP Paribas was fined 6.5 billion Euros for infringing American trading sanctions against Iran, Sudan, Cuba and Myanmar.
Organisations must be able to check whether their relations are on sanction lists and inform the DNB accordingly. Performing this check is mandatory, but each organisation may decide on a manual or electronic process, and on the frequency. The following starting points apply:
If a relation is found on a sanction list, the institution must act immediately. The action required depends on the provisions of the sanction regulation and the nature of the services. This might include freezing an insurance policy, terminating a loan or freezing a bank account. The ‘hit’ must be forwarded to DNB using a specific notification form. DNB will then assess the notification. If it does prove to be a hit, DNB sends the notification to the Ministry of Finance. The data that must be forwarded in the notification are:
The Sanctions Act is frequently updated and amended. The latest amendments became effective as per 1 January 2015 and parliamentary papers for new amendments have been submitted. The relevant amendments implemented and the relevant dates are listed here.
Compliance with the Sanctions Act is a labour intensive process for most companies. However, there are several options which can lessen the load. For example, Graydon offers customer due diligence as an automated solution. This software can be installed for you and if necessary it can even be integrated into your in-house credit-risk process. This ensures:
Prior to automating your due diligence policy, Graydon enriches, analyses and screens your full portfolio to create a ‘clean slate’.