The Prevention of Money Laundering and the Financing of Terrorism Act (‘Wwft’) has the aim to combat the laundering of proceeds from crime and the financing of terrorism in order to guarantee the integrity of the financial and economic system. To this end, almost all service providers, including us as lawyers, are obliged to identify and verify clients in certain designated services and to report unusual transactions carried out or intended to be carried out in the course of the provision of services to the relevant authorities.
When does the law apply?
The Wwft does not apply to all our activities. This is only the case if we provide advice or assistance in the area of:
- The purchase or sale of properties subject to registration;
- The management of funds, securities, coins, banknotes, precious metals or other valuables;
- The organization of the contribution necessary for the incorporation, operation or management thereof;
- The buying or selling of shares in, or the buying or selling or taking over of all or part of business, companies, legal entities or similar bodies;
- Activities in the field of taxation that are comparable with the activities of tax advisers;
- The establishment of a right of mortgage on a property subject to registration.
The Wwft also applies in the event that and insofar as a lawyer acts in the name of and at the expense of a client in any form of financial transaction or real estate transaction.
If the services required from us are subject to the Wwft, we are required by law to conduct a client screening. The extent of the investigation depends on the extent of the risk of money laundering or terrorist financing. This risk depends on various factors laid down in the law, by the government and by supervisory authorities. If there is a proven low risk, a simplified client screening will be sufficient. If it appears that there is an increased risk, a stricter client screening must be carried out.
Pursuant to the Wwft, our clients must provide proof of identity before the services commence. In this investigation we have to:
- Identify the client. We have to investigate and verify the given identity. With respect to legal entities: the person representing the legal entity must provide proof of identity. We will make a photocopy of the valid ID, and will consult the Commercial Register of the Chamber of Commerce in order to verify the contact person’s authority. With respect to natural persons: you must personally provide proof of identity, following which we are obliged to make a photocopy of your valid ID;
- If the client is a legal entity: to identify the ‘ultimate beneficial owner’(‘UBO’). We have to investigate and verify the given identity;
- The purpose and intended nature of the business;
- Whether the client is acting for himself or herself or for someone else.
Pursuant to the Wwft, we are obliged to report unusual financial transactions. Such transactions are:
- Transactions in cheques or cash amounting to EUR 15,000 or more (or sums just under this limit);
- Transactions giving rise to the supposition that they may be connected with money laundering or the financing of terrorism.
You will find more information on this Act on www.advocatenorde.nl.