The EU AML Package And Implications For The Dutch Draft Action Plan On Money Laundering

On 24 April 2024, the European Parliament agreed to an anti-money laundering package (EU AML package). A week earlier, the Dutch Finance minister wrote to the House of Representatives about the potential impact of the EU AML package on the Action Plan on Money Laundering Bill (wetsvoorstel Plan van aanpak witwassen). Through a note, the minister intends to remove inconsistencies and align the limit on cash payments above €3,000 with the EU AML package. If the proposal is adopted, the prohibition on professional or business merchants in goods to enter into cash transactions above €3,000 will most likely come into force from January 2026. It is expected that the EU AML-package becomes applicable in spring 2027.

Background

The EU AML package stems from the anti-money laundering directives implemented within the European Union over the past 20 years. On 24 April 2024, the European Parliament adopted the new Anti-Money Laundering Regulation (AMLR) and a revision of the Anti-Money Laundering Directive (AMLD6). The Prevention of Money Laundering and Financing of Terrorism Act (Wwft) concerns the implementation of the current Fifth Anti-Money Laundering Directive. In 2022, the Action Plan on Money Laundering Act (the Act) was introduced to amend parts of the Wwft. The Act was declared controversial at an earlier stage. In his letter of 16 April 2024, the Minister of Finance informed the House of Representatives about the impact of the EU AML package on the Act.

Draft Action Plan on Money Laundering Act

The Act includes four measures aimed at tackling money laundering:

1. A prohibition for professional or business traders in goods to conduct transactions above €3,000 in cash;
2. Enabling data sharing between institutions belonging to the same category in the context of customer due diligence when there is a higher risk of money laundering or terrorist financing;
3. Enabling joint monitoring of transactions by banks (in addition to the existing legal duty for banks to monitor transactions individually);
4. Clarifying the use of special categories of personal data and personal data of a criminal nature in de the context of obligations under the Wwft.

The EU AML package has implications for the Act:

1. The ban on cash payments for goods above EUR 3,000: the AMLR introduces a ban on cash payments above EUR 10,000 for natural persons, legal persons or companies trading in goods or providing services. Member states may apply a lower limit. This allows for a limit of EUR 3,000 for cash payments for goods. However, the European ban has a broader scope than the proposed Dutch ban, as it also covers service providers and the obligation to conduct customer due diligence remains in place on the basis of the AMLR/AMLD6.
2. Data sharing between institutions for customer due diligence purposes: the AMLR does not contain a similar data sharing obligation. The AMLR provides for maximum harmonisation and does not allow for a different regime at this point. Nevertheless, the minister is currently examining whether a data-sharing option can nevertheless be adopted for the Dutch market.
3. Joint transaction monitoring by banks: the AMLR introduces the possibility of data sharing, making it possible to set up a joint data sharing facility. However, this only applies to transaction data of higher-risk customers or customers from whom additional information needs to be collected to determine whether they should be placed in a higher risk category. Member states are allowed to impose additional safeguards on the use of this data based on the General Data Protection Regulation.

Follow-up Act and implementation of EU AML package

The minister's proposal is to proceed for the time being only with the proposal to ban cash payments above EUR 3,000. The other proposed parts of the Act will be scrapped, these will be included in the implementation of the EU AML package, insofar the proposals are in line with the EU AML package. The minister has announced that he will use the implementation period of the EU AML package to consider its impact on national legislation in this area and what additional measures are possible and necessary. As the main obligations for Wwft institutions will be included in the new European regulation, it is expected that a large part of the national legislation will lapse.

Interestingly, in response to questions from the Standing Committee on Finance, the minister indicated that reporting unusual transactions, rather than suspicious transactions, will continue to be possible under the new regulation (the AMLR). In previous implementation of the European anti-money laundering directives, a conscious decision was made to report unusual transactions so that there is a certain objectification of the reporting obligation. Moreover, in response to recent Parliamentary questions, the minister indicated that the FATF, in its evaluation of the Dutch system, cited the system of working with unusual transactions as an important achievement and success factor. The reporting system in the Netherlands was deliberately set up as low-threshold as possible in order to relieve all gatekeepers (not only banks) as much as possible of the burden of investigating unusual transactions. The reporting of suspicious transactions imposes an extra burden on gatekeepers, because more (in-depth) investigations into transactions are then required. The design of this system is therefore precisely to relieve the gatekeeper, according to the minister.

The amendments affect the possibility of joint transaction monitoring by banks, as for example envisaged by an initiative of the five large Dutch banks (i.e. Transactiemonitoring Nederland). The Wwft does not currently allow joint transaction monitoring by banks. On the contrary, it was envisaged that the Money Laundering Plan Act would allow banks to outsource transaction monitoring to a joint facility, with the condition that the outsourcing could only relate to the generation of alerts. This means in principle that the market has to wait for the entry into force of the new EU AML package, on the basis of which data can be exchanged where it concerns higher-risk clients or those clients of whom additional information needs to be collected for risk categorisation.

The implementation period of the EU AML package is three years. This means that the entire package is expected to become applicable in spring 2027.

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