Pursuant to Section 8 of the Wwft, institutions must conduct more intensified customer due diligence if and insofar as a business relation or transaction involves a higher risk of money laundering or terrorist financing.
Business relations or transactions involving jurisdictions identified by the FATF as having strategic deficiencies in their regimes for preventing money laundering and terrorist financing are at a higher risk of becoming involved in money laundering and terrorist financing activities. In that case, and depending on the risk of the jurisdiction involved, institutions must take extra measures to mitigate the increased risk.
Background to the FATF lists
Following every plenary FATF meeting, the FATF issues warning lists identifying jurisdictions that have strategic deficiencies in their regimes for preventing money laundering and terrorist financing. These lists are published on the FATF website  and DNB notifies institutions of these lists via news releases on its Open Book on Supervision website , for which an alerting service is available.
Institutions are expected to keep abreast of revisions of the FATF documents and take the appropriate AML/CFT measures with regard to the special circumstances described below. The FATF will review the warning documents following each of its plenary meetings (in February, June and October) if it has cause to do so.
FATF warning lists
There are three FATF warning lists. 1. FATF Public Statement: jurisdictions with serious deficiencies The FATF Public Statement lists jurisdictions with serious deficiencies in their AML/CFT regimes, which may pose risks to the international financial system. The FATF calls on its members to take appropriate countermeasures regarding certain jurisdictions on this list to protect the international financial system against the continuous and substantial risks of money laundering and terrorist financing.
To this aim, DNB and the Ministry of Finance require institutions to take one or more measures within the context of more stringent customer due diligence as referred to in Section 8 of the Wwft. In addition, extra measures will be required with respect to business relations and transactions from and to these jurisdictions.
More stringent customer due diligence includes the following measures:
- Obtaining additional information on customers and ultimate beneficial owners (UBOs), including information on the objective and nature of the business relation, the source of the funds used in the business relation or transaction, and the origin of the assets of customers and UBOs;
- More frequent updating of data on customers and UBOs;
- More stringent monitoring of business relations and customer transactions;
- Obtaining additional information on the backgrounds of and reasons for intended or performed customer transactions.
'Extra measures' include:
- More stringent monitoring of transactions, business relations and correspondent banking relations;
- Restricting transactions, business relations and correspondent banking relations;
- Not performing transactions and terminating business relations and correspondent banking relations;
- Operating very prudently in trusting third parties in these jurisdictions with respect to customer due diligence assessments, monitoring correspondent banking relations in these jurisdictions and terminating these if necessary;
- Operating very prudently in initiating or extending services and activities in these jurisdictions, for example, when establishing subsidiaries or representatives of institutions in those jurisdictions and demanding approval for this from duly authorised persons;
- Considering more stringent internal supervision and/or audits for own subsidiaries or representatives of institutions in these jurisdictions;
- Considering reporting financial transactions with these jurisdictions to FIU-NL.
2. FATF Public Statement: jurisdictions that have not made sufficient progress
In addition to the list of jurisdictions with serious deficiencies, there is a list of jurisdictions that show insufficient progress or have not committed to an action plan. DNB and the Ministry of Finance require institutions to take one or more of the above-mentioned measures with respect to more stringent customer due diligence that are aimed at the deficiencies identified in the relevant jurisdictions. Institutions should also be aware that maintaining business relations with residents of these jurisdictions, or performing transactions to and from these jurisdictions, poses a higher risk of money laundering and terrorist financing. . Institutions must also consider the FATF list if services or activities are initiated or extended in these jurisdictions.
3. Improving Global AML/CFT compliance: on-going process
The third document published by the FATF is ‘Improving Global AML/CFT Compliance: on-going process'. This document contains a list of jurisdictions that have serious deficiencies in their AML/CFT regimes but have committed themselves to addressing them. Institutions are expected to show increased awareness with respect to existing and new business relations in and transactions to and from these jurisdictions. Institutions must take appropriate measures if necessary.