Dutch Banks to Collaborate in Establishing Agency to Monitor Transactions

On July 8, the Dutch Banking Association (NVB) announced that five Dutch banks had signed an agreement to establish a new entity, Transaction Monitoring Netherlands (TMNL), that is to monitor transaction activity across all participating banks.  Those banks include industry leaders ABN AMRO, ING, and Rabobank, as well as two smaller banks, Triodos Bank and de Volksbank.

The NVB stated that the TMNL initiative, which will be an addition to the banks’ individual transaction monitoring activities, “will focus on identifying unusual patterns in payments traffic that individual banks cannot identify.”  It also noted that the banks were “working closely” with Dutch government partners such as the Ministries of Finance and Justice and Security, the Fiscal Information and Investigation Service (FIOD), and the Financial Intelligence Unit (FIU).

The genesis of the TMNL initiative was the June 30, 2019 proposed action plan by the Dutch Ministers of Finance of Justice to combat money laundering more effectively.  One of the elements of that action plan was removal of existing legal obstacles to interbank data sharing for cooperation in transaction monitoring and blacklisting of “unusual” customers.

Subsequently, the five banks studied whether collective transaction monitoring is technically and legally feasible under the aegis of the NVB, whether TMNL can add material value in the fight against money laundering.  According to the NVB,

The research showed that collective transaction will allow for better and more effective detection of criminal money flows and networks in addition to what banks can achieve individually with their own transaction data. It also showed that combining transaction data will provide new (inter-bank) information that will be useful in the fight against financial criminality. The study findings have recently been discussed with some of the public parties involved.

The NVB’s announcement indicated that certain legal issues remain concerning banks’ capacity to share transaction data.  Accordingly, the NVB stated that an amendment of the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft) “is foreseen to enable full-scale collective transaction monitoring.”

At present, the construction and development of TMNL is to be done in phases.  The NVB reported that the participating banks “have decided to start with this initiative now in anticipation of the proposed amendment to the legislation, due to the urgency of the fight against money laundering and the financing of terrorism and the support from government bodies.”  It added that a basic assumption “is that other banks will also be able to make use of TMNL in due course.”

Note: The TMNL initiative represents a potentially significant breakthrough for the Dutch financial sector in anti-money laundering (AML) capabilities.  As an NVB infographic shows, the Netherlands is ranked number 8 among the top ten countries most attractive to money launderers, with an estimated €16 billion laundered there each year.  If the Dutch States General can approve the necessary amendments to the Wwft soon, TMNL could not only provide consistent sector-wide oversight of financial transactions, but offer a model for other countries to develop similar initiatives.

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