Have you ever reported unusual transactions?
Question no. 7 from the supervisor
“Have you ever reported unusual transactions? How do you react if the supervisor asks you this question (Article 23(1) of the AML)? The AML has two main obligations: you must identify your clients and you must report any unusual transactions.
Reporting unusual transactions in the Netherlands
In the Netherlands, as a lawyer, you are obliged to report any suspicious transaction. This is different from the rest of Europe where you only report if a transaction is indeed suspicious. Dutch lawyers are reluctant when it comes to the reporting obligation. Despite the fact that it is perfectly normal for busy offices to make a report every time the occasion arises, their hesitation remains understandable. To many lawyers, it feels like 'betraying' the client or as a failure of their own.
Despite this caution, we still see a significant increase in the number of suspicious transactions. In fact, as many as 103,974 in 2020, representing a value of almost EUR 15 billion. A 163% increase compared to 2019. Interestingly, the number of files reported by the National Public Prosecutor is only a small amount of the total number of suspicious files in that year. Curious about all the research results? FIU-Nederland has made all its research data available in a PDF document.
You must always report a performed or intended unusual transaction. For this, you need the reporting portal of the Financial Intelligence Unit - the Netherlands (FIU-the Netherlands). FIU-the Netherlands is committed to preventing and combating money laundering and the financing of terrorism. This is with a view to safeguarding the integrity of the (Dutch) financial system. You can determine whether a transaction is unusual based on subjective and objective indicators. You can read all about how to make a report on the FIU web page designed specifically for this purpose.
As mentioned above, reporting unusual transactions every now and then is perfectly normal. This has nothing to do with the expertise of your office. Notaries, for instance, report unusual transactions more often, partly because they are dealing with matters that are always subject to the AML. Within the legal profession, identifying unusual transactions is somewhat more complicated. When accepting a client, a lawyer is busy determining his legal position. At this stage, the matter is often deemed not subject to the AML. Later on, however, for example when real estate and shares are involved, the opposite is true. But then an AML audit is often no longer ingrained in the process. So how do you convincingly answer the supervisor's question?
The most important thing to show a supervisor is the consideration that you have made. Suppose your office has processed thousands of files in the past four years, but has never made a report, then you can expect some critical questions. Recording is the most important element, especially in the case of customary transactions. The knowledge is often in the lawyer's head. Noting this is extra work, especially since he/she knows the matter himself. If the matter is discussed at the office, this conversation is often not recorded either. But how should one proceed?
Recording can be done in different ways. The easiest way at the moment is to purchase AML software, like RegLab. This application allows people to share their thoughts and considerations and quickly record all information. You can show the supervisor that more people have looked at and discussed the matter. With AML software, you can be sure that there is a complete recording of considerations, which means you have met the best- efforts obligation that is expected of you.
Themed file: fully prepared for the supervisor’s audit
This article is part of a number of articles and downloads that will help you prepare yourself for the supervisor’s visit. This content is based on a supervisor's FAQs during an audit. Do you want to be 100% AML-proof and ready for the supervisor’s visit? Find all FAQs in our Knowledge Centre.