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FM AMEMBASSY THE HAGUE
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UNCLAS SECTION 01 OF 06 THE HAGUE 002020 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/WE, INL, S/CT, EEB 
JUSTICE FOR AFMLS, OIA, OPDAT 
TREASURY FOR FINCEN 
STATE PLEASE PASS FEDERAL RESERVE 
PARIS ALSO FOR OECD 
USEU FOR LSNYDER 
 
E.O. 12356: N/A 
TAGS: KCRM EFIN KTFN SNAR NL
SUBJECT:  NETHERLANDS/INCSR: PART II, MONEY LAUNDERING AND FINANCIAL 
CRIMES 
 
REF: STATE 138204 
 
THE HAGUE 00002020  001.2 OF 006 
 
 
¶1.  The following is Embassy The Hague's submission of Part II of 
the 2007-2008 International Narcotics Control Strategy Report: Money 
Laundering and Financial Crimes.  Embassy Point of Contact for this 
report is Deputy TFCO/Econoff Jay Heung at heungj2@state.gov, 
+31.70.310.2339.  As requested reftel, Post will also email the 
report to Gary Williams, Ed Rindler, Jennifer Showell, Tim Ott, and 
Tim Smith, the Netherlands Desk Officer. 
 
¶2.  BEGIN TEXT OF REPORT 
 
THE NETHERLANDS 
 
The Netherlands is a major financial center and an attractive venue 
for the laundering of funds generated from a variety of illicit 
activities. Activities involving money laundering are often related 
to the sale of heroin, cocaine, cannabis, or synthetic and designer 
drugs (such as ecstasy). As a major financial center, several Dutch 
financial institutions engage in international business transactions 
involving large amounts of United States currency. There are, 
however, no indications that significant amounts of U.S. dollar 
transactions conducted by financial institutions in the Netherlands 
stem from illicit activity. Activities involving financial fraud are 
believed to generate a considerable portion of domestic money 
laundering. A recent report by the University of Utrecht 
commissioned by the Ministry of Finance has found that much of the 
money laundered in the Netherlands comes from abroad, but did not 
find evidence that it is predominantly owned by major drug cartels 
and other international criminal organizations. There are no 
indications of syndicate-type structures in organized crime or money 
laundering, and there is virtually no black market for smuggled 
goods in the Netherlands. Although under the Schengen Accord there 
are no formal controls on the borders with Germany and Belgium, the 
Dutch authorities run special operations in the border areas to keep 
smuggling to a minimum. Reportedly, money laundering amounts to 18.5 
billion euros (approximately $27.14 billion) annually, or five 
percent of the Dutch GDP. The Netherlands is not an offshore 
financial center nor are there any free trade zones in the 
Netherlands. 
 
In 1994, the Government of the Netherlands (GON) criminalized money 
laundering related to all crimes. In December 2001, the GON enacted 
legislation specifically criminalizing facilitating, encouraging, or 
engaging in money laundering. This eases the public prosecutor's 
burden of proof regarding the criminal origins of proceeds: under 
the law, the public prosecutor needs only to prove that the proceeds 
"apparently" originated from a crime. Self-laundering is also 
covered. In two cases in 2004 and 2005, the Dutch Supreme Court 
confirmed the broad application of the money laundering provisions 
by stating that the public prosecutor does not need to prove the 
exact origin of laundered proceeds for conviction, and that the 
general criminal origin as well as the knowledge of the perpetrator 
may be deducted from objective circumstances. 
 
The Netherlands has an "all offenses" regime for predicate offenses 
of money laundering. The penalty for "deliberate acts" of money 
laundering is a maximum of four years' imprisonment and a maximum 
fine of 45,000 euros (approximately $66,000), while "liable acts" of 
money laundering (by people who do not know first-hand of the 
criminal nature of the origin of the money, but should have reason 
to suspect it) are subject to a maximum imprisonment of one year and 
a fine no greater than 45,000 euros (approximately $66,000). 
Habitual money laundering may be punished with a maximum 
imprisonment of six years and a maximum fine of 45,000 euros 
(approximately $66,000), and those convicted may also have their 
professional licenses revoked. In addition to criminal prosecution 
for money laundering offenses, money laundering suspects can also be 
charged with participation in a criminal organization (Article 140 
of the Penal Code), violations of the financial regulatory acts, 
violations of the Sanctions Act, or noncompliance with the 
obligation to declare unusual transactions according to the Economic 
Offenses Act. 
 
The Netherlands has comprehensive anti-money laundering legislation. 
The Services Identification Act and the Disclosure Act set forth 
 
THE HAGUE 00002020  002.2 OF 006 
 
 
identification and reporting requirements. All financial 
institutions in the Netherlands, including banks, bureaux de change, 
casinos, life insurance companies, securities firms, stock brokers, 
and credit card companies, are required to report cash transactions 
over certain thresholds (varying from 2,500 to 15,000 euros or 
approximately $3,670 to $21,000), as well as any less substantial 
transaction that appears unusual, a broader standard than 
"suspicious" transactions, to the Netherlands' financial 
intelligence unit (FIU-the Netherlands). In December 2001, the 
reporting requirements were expanded to include trust companies, 
financing companies, and commercial dealers of high-value goods. In 
June 2003, notaries, lawyers, real estate agents/intermediaries, 
accountants, business economic consultants, independent legal 
advisers, trust companies and other providers of trust related 
services, and tax advisors were added. 
 
The FIU for the Netherlands is a hybrid administrative-law 
enforcement unit that in 2006 combined the traditional FIU MOT 
(Meldpunt Ongebruikelijke Transacties, or in English the Office for 
the Disclosure of Unusual Transactions) with its police counterpart, 
the Office of Operational Support of the National Public Prosecutor 
(BLOM). When MOT, established in 1994, and the BLOM merged, the 
resulting entity was integrated within the National Police (KLPD). 
The new unit is called the FIU-the Netherlands. This new FIU 
structure provides an administrative function that receives, 
analyzes, and disseminates the unusual and currency transaction 
reports filed by banks, financial institutions and other reporting 
entities. It also provides a police function that serves as a point 
of contact for law enforcement. It forwards suspicious transaction 
reports with preliminary investigative information to the Police 
Investigation Service. This new organization responds to requests 
from foreign FIUs for financial and law enforcement information. 
Over the last five years, the MOT and the BLOM cooperated closely in 
responding to international requests for information, so this merger 
has not changed the nature of the Dutch reporting system. FIU-the 
Netherlands is part of the Egmont Group. 
 
Reporting entities that fail to file reports with the FIU-the 
Netherlands can be prosecuted in one of two ways.  First, one of 
four supervisors may impose an administrative fine of up to 32,670 
euros (approximately $47,905), depending on the size of the entity. 
The supervisor involved depends on the type of entity.  The Dutch 
Tax Administration supervises commercial dealers.  The Bureau 
Financieel Toezicht (BFT or Office for Financial Oversight) 
supervises notaries, lawyers, real estate agents, and accountants. 
De Nederlandsche Bank (Dutch Central Bank) supervises trust 
companies, casinos, banks, bureaux de change, and insurance 
companies.  The Authority for Financial Markets supervises 
clearinghouses, brokers, and securities firms.  Second, the public 
prosecutor may fine non-reporting entities 11,250 euros 
(approximately $16,495), or charge individuals failing to report 
with prison terms of up to two years. Under the Services 
Identification Act, all those that are subject to reporting 
obligations must identify their clients, including the identity of 
ultimate beneficial owners, either at the time of the transaction or 
prior to the transaction, before providing financial services. 
 
Since 2005 the GON has implemented a number of measures to enhance 
the effectiveness of its antimoney laundering system. In November 
2005, the Board of Procurators General, which establishes guidelines 
for public prosecutors, issued a National Directive on money 
laundering crime that mandated a financial investigation in every 
serious crime case, set guidelines for determining when to prosecute 
for money laundering and provided technical explanations of money 
laundering offenses, case law, and the use of financial 
intelligence. A new set of indicators, which determine when an 
unusual transaction report must be filed, also entered into force in 
November 2005. These new indicators represent a partial shift from a 
rule-based to a risk-based system and are aimed at reducing the 
administrative costs of reporting unusual transactions for the 
reporting institutions without limiting the preventive nature of the 
reporting system. The Dutch parliament has also approved amendments 
to the Services Identification Act and Disclosure Act that expand 
supervision authority and introduce punitive damages. The revised 
legislation, which became effective on May 1, 2006, incorporates a 
terrorist financing indicator in the reporting system. 
 
THE HAGUE 00002020  003.2 OF 006 
 
 
 
Financial institutions are also required by law to maintain records 
necessary to reconstruct financial transactions for at least five 
years after termination of the relationship. There are no secrecy 
laws or fiscal regulations that prohibit Dutch banks from disclosing 
client and owner information to bank supervisors, law enforcement 
officials, or tax authorities. Financial institutions and all other 
institutions under the reporting and identification acts, and their 
employees, are specifically protected by law from criminal or civil 
liability related to cooperation with law enforcement or bank 
supervisory authorities. Furthermore, current legislation requires 
Customs authorities to report unusual transactions to the FIU-the 
Netherlands. In June 2006, a law introducing a currency declaration 
requirement for amounts valued over 10,000 euros for travelers 
entering and leaving Schengen became effective. The law requires 
travelers to submit a declaration form and implements EU regulation 
1889/2005 on Liquid Assets Control.  The Dutch use specially trained 
dogs at ports and airports to identify cash smugglers, finding four 
million euros (approximately $5.9 million) in passenger luggage at 
Schiphol airport alone in 2006. 
 
The Money Transfer and Exchange Offices Act, which was passed in 
June 2001, requires money transfer offices, as well as exchange 
offices, to obtain a permit to operate, and subjects them to 
supervision by the Central Bank. Every money transfer client has to 
be identified and all transactions totaling more than 2,000 euros 
(approximately $2,935) must be reported to the FIU-the Netherlands. 
 
The Central Bank of the Netherlands, which merged with the Pension 
and Insurance Chamber in April 2004, and the Financial Markets 
Authority, as the supervisors of the Dutch financial sector, 
regularly exchanges information nationally and internationally. 
Sharing of information by Dutch supervisors does not require formal 
agreements or memoranda of understanding (MOUs). 
 
The FIU-the Netherlands receives 100 percent of unusual transaction 
reports electronically through its secure website. In 2005, the 
FIU-the Netherlands received 181,623 reports and forwarded 38,481, 
totaling over 1.1 billion euros (approximately $1.6 billion), to 
enforcement agencies such as the police, fiscal police, and public 
prosecutor. In 2006, the FIU-the Netherlands received 172,865 
unusual transaction reports and forwarded 34,531, totaling over 9.2 
million euros (approximately $13.5 billion)to enforcement agencies 
as suspicious transactions for further investigation. The average 
amount reported was 26,870 euros (approximately $39,400) in 2006, a 
decrease from the 28,945 euros (approximately $42,440) average 
reported in 2005. Approximately 89% of the transactions are in 
Euros, 8% are in other European currency (of which 5% are in English 
Pounds) and finally 3% of the transactions are in US Dollars. 
 
In order to facilitate the forwarding of suspicious transactions, 
the FIU-the Netherlands created an electronic network called 
Intranet Suspicious Transactions (IST). Fully automatic matches of 
data from the police databases are included with the unusual 
transaction reports forwarded to enforcement agencies. On January 1, 
2003, the former MOT and BLOM organizations together created a 
special unit (the MBA-unit) to analyze data generated from the IST. 
Under the new FIU-the Netherlands structure, the MBA continues to 
analyze IST data and forwards"reports to the police. Since the money 
laundering detection system also covers areas outside the financial 
sector, the system is used for detecting and tracing terroristQfinancing activity. The FIU-the Netherlands provides the antimoney 
laundering division of Europol with suspicious transaction reports, 
and Europol applies the same analysis tools as the FIU-the 
Netherlands. 
 
The Netherlands has enacted legislation governing asset forfeiture. 
The 1992 Asset Seizure and Confiscation Act enables authorities to 
confiscate assets that are illicitly obtained or otherwise connected 
to criminal acts. The GON amended the legislation in 2003 to improve 
and strengthen the options for identifying, freezing, and seizing 
criminal assets. The police and several special investigation 
services are responsible for enforcement in this area. These 
entities have adequate powers and resources to trace and seize 
assets. All law enforcement investigations into serious crime may 
integrate asset seizure. 
 
THE HAGUE 00002020  004.2 OF 006 
 
 
 
Authorities may seize any tangible assets, such as real estate or 
other conveyances that were purchased directly with the proceeds of 
a transaction tracked to illegal activities. Property subject to 
confiscation as an instrumentality may consist of both moveable 
property and claims. Assets can be seized as a value-based 
confiscation. Asset seizure and confiscation legislation also 
provides for the seizure of additional assets controlled by a drug 
trafficker. Legislation defines property for the purpose of 
confiscation as "any object and any property right." Proceeds from 
narcotics asset seizures and forfeitures are deposited in the 
general fund of the Ministry of Finance. Dutch authorities have not 
identified any significant legal loopholes that allow drug 
traffickers to shield assets. 
 
In order to promote the confiscation of criminal assets, the GON has 
instituted special court procedures. These procedures enable law 
enforcement to continue financial investigations in order to prepare 
confiscation orders after the underlying crimes have been 
successfully adjudicated. All police and investigative services in 
the field of organized crime rely on the real time assistance of 
financial detectives and accountants, as well as on the assistance 
of the Proceeds of Crime Office (BOOM), a special bureau advising 
the Office of the Public Prosecutor in international and complex 
seizure and confiscation cases. To further international cooperation 
in this area, the Camden Asset Recovery Network (CARIN) was set up 
in The Hague in September 2004. BOOM played a leading role in the 
establishment of this informal international network of asset 
recovery specialists, whose aim is the exchange of information and 
expertise in the area of asset recovery. 
 
Statistics provided by the Office of the Public Prosecutor show that 
the assets seized in 2006 amounted to 17 million euros 
(approximately $24.9 million). This compares with 11 million euros 
in 2005 and 11 million euros in 2004 (approximately $14.5 million 
and $13 million respectively, based on the exchange rates at the 
time). The United States and the Netherlands have had an 
asset-sharing agreement in place since 1994. The Netherlands also 
has an asset-sharing treaty with the United Kingdom, and an 
agreement with Luxembourg. 
 
In June 2004, the Minister of Justice sent an evaluation study to 
the Parliament on specific problems encountered with asset 
forfeiture in large, complex cases. In response to this report, the 
GON announced several measures to improve the effectiveness of asset 
seizure enforcement, including steps to increase expertise in the 
financial and economic field, assign extra public prosecutors to 
improve the coordination and handling of large, complex cases, and 
establish a specific asset forfeiture fund. The Office of the Public 
Prosecutor has designed a new centralized approach for large 
confiscation cases and a more flexible approach for handling smaller 
cases. Both took effect in 2006 and significantly increase BOOM's 
capacity to handle asset forfeiture cases. 
 
Terrorist financing is a crime in the Netherlands. In August 2004, 
the Act on Terrorist Crimes, implementing the 2002 EU framework 
decision on combating terrorism, became effective. The Act makes 
recruitment for the Jihad and conspiracy to commit a terrorist act 
criminal offenses. In 2004, the government created a National 
Counterterrorism Coordinator's Office to streamline and enhance 
Dutch counterterrorism efforts. 
 
UN resolutions and EU regulations form a direct part of the national 
legislation on sanctions in the Netherlands. The "Sanction Provision 
for the Duty to Report on Terrorism" was passed in 1977 and amended 
in June 2002 to implement European Union (EU) Regulation 2580/2001. 
United Nations Security Council Resolution (UNSCR) 1373 is 
implemented through Council Regulation 2580/01; listing is through 
the "Clearing-House" procedure. The ministerial decree provides 
authority to the Netherlands to identify, freeze, and seize 
terrorist finance assets. The decree also requires financial 
institutions to report to the FIU-the Netherlands all transactions 
(actually carried out or intended) that involve persons, groups, and 
entities that have been linked, either domestically or 
internationally, with terrorism. Any terrorist crime will 
automatically qualify as a predicate offense under the Netherlands 
 
THE HAGUE 00002020  005.2 OF 006 
 
 
"all offenses" regime for predicate offenses of money laundering. 
Involvement in financial transactions with suspected terrorists and 
terrorist organizations listed on the United Nations (UN) 1267 
Sanctions Committee's consolidated list or designated by the EU has 
been made a criminal offense. The Dutch have taken steps to freeze 
the assets of individuals and groups included on the UNSCR 1267 
Sanctions Committee's consolidated list. UNSCR 1267/1390 is 
implemented through Council Regulation 881/02. Sanctions Law 1977 
also addresses this requirement parallel to the regulation in the 
Netherlands. 
 
The Netherlands does not require a collective EU decision to 
identify and freeze assets suspectedof being linked to terrorism 
nationally. In thesecases, the Minister of Foreign Affairs and the 
Mnister of Finance make the decision to execute theasset freeze. 
Decisions take place within three ays after identification of a 
target. Authoritie have used this instrument several times in 
recen years. In three cases, national action followed te actions 
taking place on the EU level. In one cse, the entity was included 
on the UN 1267 list nd was automatically included in the list that 
i part of EU regulation 2002/881. In two other cases the 
Netherlands successfully nominated the entiy/individual for 
inclusion on the autonomous EU ist that is compiled pursuant to 
Common Position2001/931. 
 
The 2004 Act on Terrorist Offenses inroduced Article 140A of the 
Criminal Code, which riminalizes participation in a terrorist 
organiztion, and defined participation as membership or poviding 
provision of monetary or other material upport. Article 140A 
carries a maximum penalty o fifteen years' imprisonment for 
participation in and life imprisonment for leadership of, a 
terrrist organization. Nine individuals were convictedin March 
2006 on charges of membership in a terrrist organization. 
Legislation expanding the useof "special investigative techniques" 
was enactedin February 2007. 
 
Unusual transaction reports b the financial sector act as the first 
step agaist the abuse of religious organizations, foundatios and 
charitable institutions for terrorist finacing. No individual or 
legal entity using the financial system (including churches and 
other religious institutions) is exempt from the identification 
requirement. Financial institutions must also inquire about the 
identity of the ultimate beneficial owners. The second step, 
provided by Dutch civil law, requires registration of all active 
foundations in the registers of the Chambers of Commerce. Each 
foundation's formal statutes (creation of the foundation must be 
certified by a notary of law) must be submitted to the Chambers. 
Charitable institutions also register with, and report to, the tax 
authorities in order to qualify for favorable tax treatment. 
Approximately 15,000 organizations (and their managements) are 
registered in this way. The organizations must file their statutes, 
showing their purpose and mode of operations, and submit annual 
reports. Samples are taken for auditing. Finally, many Dutch 
charities are registered with or monitored by private "watchdog" 
organizations or self-regulatory bodies, the most important of which 
is the Central Bureau for Fund Raising. In April 2005, the GON 
approved a plan to replace the current initial screening of founders 
of private and public-limited partnerships and foundations with an 
ongoing screening system. The new system will be introduced in 2007 
to improve Dutch efforts to fight fraud, money laundering, and 
terrorist financing. 
 
Certain groups of immigrants are the primary users of informal banks 
to send money to their relatives in their countries of origin. 
However there are also indications of the misuse of informal banks 
in the Netherlands for criminal purposes, including a small number 
of informal bankers which are deliberately engaged in money 
laundering transactions and cross border transfers of criminal 
money. Initial research by the Dutch police and Internal Revenue 
Service and Economic Control Service (FIOD/ECD) indicates that the 
number of informal banks and hawaladars in the Netherlands is 
rising. The Dutch Government plans to implement improved procedures 
for tracing and prosecuting unlicensed informal or hawala-type 
activity, with the Dutch Central Bank, FIOD/ECD, the Financial 
Expertise Center, and the Police playing a coordinating and central 
role. The Dutch Finance Ministry has participated in a World 
 
THE HAGUE 00002020  006.2 OF 006 
 
 
Bank-initiated international survey on money flows by immigrants to 
their native countries, with a focus on relations between the 
Netherlands and Suriname. The Dutch Central Bank has initiated a 
study into the number of informal banking institutions in the 
Netherlands. In Amsterdam, a special police unit has been 
investigating underground bankers. These investigations have 
resulted in the disruption of three major underground banking 
schemes. 
 
The Netherlands is in compliance with all FATF Recommendations, with 
respect to both legislation and enforcement. The Netherlands also 
complies with the Second EU Money Laundering Directive and plans to 
implement the Third EU Money Laundering Directive through the 
adoption of a new act on combating money laundering and terrorism 
financing that will enter into force in 2008. 
 
The United States enjoys good cooperation with the Netherlands in 
fighting international crime, including money laundering. In 
September 2004, the United States and the Netherlands signed 
bilateral implementing instruments for the U.S. - EU mutual legal 
assistance and extradition treaties; the agreements have not yet 
been ratified.. One provision of the U.S.- EU legal assistance 
agreement would facilitate the exchange of information on bank 
accounts.  In 2007, the Dutch Ministry of Justice approved two MLAT 
requests for the U.S. Drug Enforcement Agency to attempt two 
undercover money pick up operations targeting Colombian money 
laundering organizations operating in the Netherlands.  This was the 
first time that such an operation was attempted in the Netherlands; 
the operation is still ongoing. 
 
The former MOT organization supervised the PHARE Project for the 
European Union (March 2002-December 2003). The PHARE Project was the 
European Commission's Anti-Money Laundering Project for Economic 
Reconstruction Assistance to Estonia, Latvia, Lithuania, Poland, the 
Czech Republic, Slovakia, Hungary, Slovenia, Romania, Bulgaria, 
Cyprus, and Malta. The purpose of the project was to provide support 
to Central and Eastern European countries in the development and/or 
improvement of antimoney laundering regulations. Although the PHARE 
project concluded in December 2003, the MOT moved forward with the 
development of the FIU.NET Project, (an electronic exchange of 
current information between European FIUs by means of a secure 
intranet), which the new FIU-the Netherlands structure continues to 
use. In March 2006, the Dutch hosted a major international terrorist 
financing conference. 
 
The Netherlands is a member of the Financial Action Task Force and 
the Council of Europe Select Committee of Experts on the Evaluation 
of Anti-Money Laundering Measures (MONEYVAL). The Netherlands 
participates in the Caribbean Financial Action Task Force as a 
Cooperating and Supporting Nation. As a member of the Egmont Group, 
the FIU-the Netherlands has established close links with the U.S 
Treasury's FinCEN as well as with other Egmont members, and is 
involved in efforts to expand international cooperation. The 
Netherlands is a party to the 1988 UN Drug Convention, and the UN 
International Convention for the Suppression of the Financing of 
Terrorism, and the UN Convention against Transnational Organized 
Crime. 
 
END TEXT OF REPORT 
 
ARNALL