These Q&As are intended to offer trust offices some pointers for conducting customer due diligence.
Customer due diligence (CDD)
Why is CDD required?
Trust offices may enter into business relationships with the purpose of providing trust services on behalf of, or together with, other trust offices, tax offices, or solicitors. Often more than one mandate follows from these relationships: the business relation brings in customers and object companies. The Regulation on Sound Operational Management relating to the Act on the Supervision of Trust Offices (Regeling integere bedrijfsvoering Wet toezicht trustkantoren – Rib Wtt 2014) stipulates that trust offices must conduct due diligence on the business relationship itself as well as on the customers and/or object companies brought in by this business relationship.
What does CDD entail?
The Rib Wtt 2014 introduces a new element in customer due diligence procedures of trust offices. The trust office is required to screen every party with which it enters into a business relationship, if this business relationship leads to the provision of trust services. This should also be done if the envisaged trust services are not directly provided to the party with which the business relationship is established. This means that the trust office must from now on also conduct due diligence on the introducing party or the intermediaries. This due diligence must be conducted according to the method prescribed in the Anti-Money Laundering and Anti-Terrorist Financing Act(Wet ter voorkoming van witwassen en financieren van terrorisme – Wwft).
In addition to due diligence on the customer and/or the commissioning party, the trust office also has to conduct the 'regular' due diligence on the object company pursuant to the Supervision of Trust Offices Act (Wet toezicht trustkantoren – Wtt). The double due diligence requirement will in some cases lead to an increase in the number of parties involved in the service provision that must undergo due diligence.
How should this CDD be organised?
Customer due diligence must be performed in accordance with the Wwft; the relevant article in the Rib has been copied from the Wwft. As the Wwft-provision is the same as that included in the Rib, trust offices can make use of the tools for the performance of due diligence included in Section 4 of the DNB Guidance document on Anti-Money Laundering and Anti-Terrorist Financing Act and the Sanctions Act (DNB Leidraad Wwft en SW).
You have a contact in Russia, a tax advisor, who regularly contacts you to establish and manage object companies in the Netherlands for one of his customers. The UBO of the object company is a Russian firm.
A multinational company wants to set up a company in the Netherlands. The multinational is the customer here, and the Dutch company is to be the object company. In this case, the trust office is required to conduct due diligence on the multinational company pursuant to Section 13, and on the object company pursuant to Section 19 of the Rib Wtt 2014.