As a Wwft gatekeeper, it is essential that you understand Dutch financial law laws and regulations. This blog post explains what Wwft, PEP, and EDD (Enhanced Due Diligence) are and how they work.
Legislation against crime
The Wet ter voorkoming van witwassen en financieren van terrorisme (Wwft) is a Dutch law, introduced to meet the obligations of the European Anti Money Laundering Directive. The European directive aims to protect financial systems from abuse by criminals who seek to launder proceeds of their crimes. In addition, the directive aims to prevent the financing of terrorism. The Wwft therefore obliges financial institutions in the Netherlands to take adequate measures to prevent money laundering and the financing of terrorism.
These financial regulations consequently affect practices within the financial sector, for example in the CDD assessment of PEPs. PEPs are individuals who hold public office or politically sensitive positions, such as senior government officials or members of parliament. Financial institutions must assess any customer who meets this definition as higher risk when doing business with them because of their potential access to illicit funds or influence on decision-making. Therefore, under the Wwft, all financial institutions must conduct Enhanced Due Diligence (EDD) investigations on all customers identified as PEPs to ensure that no illicit funds are handled through their accounts.
Wwft gatekeepers must also be alert to sanctions against (legal) persons in the Netherlands. Sanctions may include freezing assets or imposing a travel ban. These sanctions must be implemented if a customer's name matches a person or legal entity on a sanctions list maintained by national authorities and international organizations such as OFAC. It is essential for companies doing business in the Netherlands to have processes in place to screen clients on these sanctions lists to remain compliant with Wwft regulations.
Insight into Wwft, PEPs, EDD, and other aspects of the Dutch financial law is essential for CFOs and compliance officers operating in this market. It is important for these individuals to be familiar with regulations surrounding money laundering prevention, the assessment of politically exposed persons, comprehensive due diligence-requirements and any applicable sanction lists so that their business remains compliant with all local laws and regulations. By implementing processes that comply with laws and regulations in this area, companies can reduce their risk exposure and still gain access to this lucrative market.
