On 3 October, AFM issued rules on investment institutions risks of AML.
- Concern of managers/administrators of investment institutions facing AML/CTF risk.
- AFM asked administrators what they do to prevent becoming involved in laundering.
- Concluded that compliance with laws needed to be improved for a number of areas.
Monitoring Prevention
- AFM and DNB supervises AML, Financing of Terrorism Act (Wwft), Sanctiewet 1977.
- AFM sent questionnaire to 223 registered administrators of investment firms/funds.
- Group is exempted from AIFMD license but supervised by AFM re Wwft/Sanctiewet.
- Gave individual feedback indicating which AML components they need to improve.
Improvements
- Almost half of registered administrators lack a written wwft and sanctiewet policy.
- This policy requires procedures, to determine when a client falls in a risk category.
- Policy clarifies risks of involvement in AML and and how the risks can be controlled.
- Know your Client
- Most administrators research their clients, but half did not review other business
relationships, e.g. seller of real estate invested or people behind investor startup. - One third of clients copy a valid ID while law stipulates documentation is required.
- Copy is only allowed if client's or stakeholder's identity (UBO) was already verified.
High Risk Countries
- AFM has seen that a number of registered administrators invest in risky countries.
- Or clients have a connection with a risky country (for example, through the UBO).
- AFM cited high risk countries identified as such by the Financial Action Task Force.
- Those in Top 50 of corruption perceptions index, or under international sanctions.
- If do business in risky countries, administrator should take actions to reduce risk.
- Obligation to screen list sanctions generally complied with: almost 90% doing this.
- Each firm is responsible, cannot rely on control done by others, e.g. Dutch banks.
- Effectiveness
- AFM advises companies to ascertain whether policies and procedures meet laws.
- Ahead of implementation of the Fourth AML Directive (AMLD4) in Wwft in 2018.
- Will become mandatory for Wwft institutions to identify and clarify its AML risks.
- The WWFT institution, must then take measures, to limit and control these risks.
- In 2018, AFM will research compliance with Wwft, by licensed investment firms.
