Netherlands Proposes Consolidated Organization to Monitor Payment Transactions for Anti-Money Laundering Purposes

On September 13, the Nederlandse Vereniging van Banken (NVB, or Dutch Banking  Association) issued a press release (in Dutch and English) that announced a banking-industry initiative to enhance cooperation in the fight against money laundering.  The release stated that five Dutch banks — ABN AMRO, ING, Rabobank, Triodos Bank, and de Volksbank—are seeking “to set up an organisation that will monitor payment transactions: Transaction Monitoring Netherlands (TMNL).”

The NVB prefaced its comments about this initiative by recognizing that “[i]n their gate-keeping role, Dutch banks have an important function in protecting the integrity of the Dutch financial system,” and that “the banks are continually monitoring customer transactions with the aim of combating money laundering and the financing of terrorism.”  It noted that this initiative, which “the banks are actively supporting,” stems from the Money Laundering Action Plan that Dutch Minister of Finance Wopke Hoekstra and Minister of Justice and Security Ferdinand Grapperhaus outlined in July 2019.

Over the next six months, the NVB explained, it and the five banks will study whether the TMNL “is feasible given the technical and legal challenges involved.”   In light of the 68,000 unusual transactions that the banks reported to the Dutch Financial Intelligence Unit (FIU) in 2018 – 15,000 of which the FIU deemed suspicious – it stated that

[t]he banks are determined not to cooperate in money laundering in any way whatsoever. As part of their social responsibility, the banks are actively working on improving the effectiveness of their transaction monitoring in order to significantly increase the return from identification, detection, prosecution and conviction of criminal conduct. The combining of transactions effected by the various banks is expected to make it easier to spot flows of criminal funds.

The NVB also made clear that in connection with this initiative, the participating banks “are specifically looking for cooperation” with the FIU, the Dutch Openbaar Ministerie (Public Prosecution Service),  the Dutch Fiscale Inlichtingen- en Opsporingsdienst (FIOD, or Fiscal Information and Investigation Service),   and ministries.

Note:  This initiative is one that authorities across Europe and beyond – especially the United States – should follow closely over the next six months.  The financial sector is well aware that the current global regime for monitoring transactions for anti-money laundering and terrorist financing (AML/TF) basically consists of tens of thousands of unconnected  “stovepipes,” in which financial institutions review only their internal transactions without reference to potentially relevant transactions that other financial institutions are identifying.  The joint initiative between the NVB and Dutch banks offers a promising opportunity to see whether a more coherent approach to AML/TF transaction monitoring can be devised in conformity with national and European Union legal requirements.