Dutch implementation of the 4th Anti-Money Laundering (EU) Directive: introduction of the ‘pseudo‘ UBO

On the 25th day of July 2018 the Implementation Act of the 4th Anti-Money Laundering (EU) Directive (the ‘4th AML Directive’) came into effect by amending the Money Laundering and Terrorist Financing (Prevention) Act (the ‘Wwft’) and the Implementation Decree Wwft 2018 (the ‘Decree’). The purpose of the 4th AML Directive is to further prevent abuse of the financial system, by registering who qualifies as an ultimate beneficial owner (‘UBO’).

The Dutch government still needs to resolve on new legislation to implement a (public) UBO register, by amending the Commercial Register Act 2007 (‘CRA’). The expectation is that this will  happen in 2019 at the latest. In anticipation of the amendment of the CRA, the Dutch Parliament has decided to implement part of the 4th AML Directive already.

The most significant amendment implemented by the Decree is the introduction of a so-called pseudo-UBO and the amendment of the definition of political exposed person (‘PEP’).

‘Real’ UBO
The core of the UBO definition remains unchanged, being that a natural person who is the ultimate owner of or has control over a client, or the natural person on whose behalf a transaction is made or an activity is performed, qualifies as UBO. The term UBO essentially still revolves around having more than 25% of the interests in an entity (in ownership rights, shares or votes) or having effective control over the relevant entity.

‘Pseudo’ UBO
With the implementation of the amended Wwft and Decree, the relevant financial institutions and professionals are obliged to designate at least one UBO for each entity. If it is not possible to point out a “real” UBO as described above, the amended Wwft and Decree state that a higher managerial staff member should be designated as ‘pseudo-UBO’. In the explanatory memorandum to the Decree it is explained that “higher managerial staff members” means statutory (managing) directors and/or partners in partnerships or trusts.

PEP
Furthermore, it must be investigated whether or not a PEP is involved. The definition of a PEP is expanded in such way that persons living in the Netherlands and having the Dutch nationality, may now also qualify as PEP.

Higher sanctions
Finally, the sanctions on not satisfying the requirements listed in the Wwft have been expanded, by increasing the maximum penalty and by publishing any sanctions imposed by the Financial Supervision Office (Bureau Financieel Toezicht) on its website (naming & shaming).

The full text of the Wwft and the Decree (including the explanatory memorandum) can be find here (available in Dutch only):
https://www.eerstekamer.nl/behandeling/20180306/gewijzigd_voorstel_van_wet_4/document3/f=/vkmmbve3kwzx_opgemaakt.pdf
https://www.eerstekamer.nl/bijlage/20180406/ontwerp_uitvoeringsbesluit_wwft/document3/f=/vknam8u7zde7.pdf

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Martina Priekaar