Although people often think only banks and other financial institutions fall under the scope of the Prevention of Money Laundering and Financing of Terrorism Act (Wwft), lawyers and notaries also fall under the scope of the act under certain circumstances. These professional groups must ensure compliance with the obligations under the Wwft in certain cases. This blog will discuss what exactly the Wwft aims to achieve and in what way lawyers and notaries have to comply with the obligations arising from it.
The Wwft
The Wwft is the Dutch implementation of the fourth and fifth anti-money laundering directives. As its name suggests, the Wwft aims to combat financial crime, more specifically money laundering and the financing of terrorism. To achieve this goal, the Wwft imposes an obligation on banks and other financial institutions (but therefore also lawyers) to conduct a client screening (art. 2a Wwft). The purpose of this investigation is, among other things, to identify the client or the beneficial owner of a legal entity (UBO) and establish the purpose and intended nature of the business relationship (art. 3 Wwft). If it is concluded that a particular client poses a risk (in other words: there are strong indications that the client is involved in money laundering or terrorist financing), the financial institution should sound the alarm with the supervisory authority. For banks, this is the Dutch Central Bank and for law firms it is its supervisory organ (art. 1d(1)(d) Wwft).
What exactly do these obligations imply for law firms?
The provisions of the Wwft thus also apply to lawyers (Section 1a(4)(c) Wwft). Specifically, for lawyers, in the case of a legal entity, they must request a UBO extract and its accuracy must be verified. If the UBO registration does not match the registration with the Chamber of Commerce (CoC), a so-called reporting duty applies (art. 10c Wwft). This means that the lawyer has to inform the CoC about the discrepancy between the UBO registration and the CoC extract.
Under the Wwft, an identification obligation also applies. Among other things, a natural person can be identified on the basis of a valid passport, identity card and driving licence (Section 4(1) Wwft Implementation Regulation). Legal persons can be identified, inter alia, with a copy of the extract from the Chamber of Commerce and a deed or statement drawn up by a civil-law notary (art. 11 Wwft). In the case of foreign legal entities not established in the Netherlands, identification is made on the basis of documents from independent sources, data or information customary in international practice or on the basis of documents, data or information recognised by law as valid means of identification in the state of origin (art. 11(3) Wwft). It is up to the lawyers themselves to determine whether a particular document suffices as identification.
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