Legal entities can be prosecuted for criminal offences committed by their employees, including by their employees abroad. In the last couple of years, we have seen the Dutch Anti-Money Laundering (AML) regime being strengthened and we expect this trend to continue. Out-of-court corporate settlements have been criticised for lack of transparency and there has been a call for some form of judicial review of these settlements. This discussion is still on-going, and has the attention of the Dutch government and Parliament. This has effectively put a freeze on new settlements until the issue is resolved. A new child labour due diligence law will increase corporate focus on supply chains.
- Investigations trends/developments
- Significant law reforms impacting corporate criminal liability
- Internal investigations – key developments
- Sectors targeted by law reforms or enforcement action
- Cross-border enforcement activity
- Financial crime issue predictions for 2020
The amounts paid in out-of-court settlements with the Dutch Public Prosecution Service have increased rapidly in the last couple of years. In 2013, the highest out-of-court settlement ever reached was with Rabobank for EUR70 million, followed by an out-of-court settlement with VimpelCom in 2016 for almost EUR400m. In 2018, ING paid an out-of-court settlement of EUR775m.
Increasing out-of-court settlement amounts have been widely criticised for a lack of transparency, especially compared to a public trial. Some form of judicial review of out-of-court settlements of EUR50,000 or more is being considered in Parliament. It is unlikely that any large out-of-court settlements will be agreed whilst this issue is being considered.
Both the Dutch regulators and the Dutch Public Prosecution Service are more focussed on AML compliance by financial institutions and other entities that fall within the scope of Dutch AML laws. The out-of-court settlement agreement with ING in 2018 for EUR775m related to alleged breaches of Dutch AML laws. There are currently criminal investigations into ABN AMRO and EY for alleged breaches of Dutch AML laws.
The Netherlands has taken its first steps in the field of human rights due diligence by enacting the “child labour due diligence law” (Wet zorgplicht kinderarbeid) in October 2019. This obliges a company with end-users in the Netherlands to conduct due diligence on its supply chain, and to publish a declaration stating that the company adheres to due diligence requirements to prevent child labour. Compared to similar laws, like the UK Modern Slavery Act 2015, a key trait of this new due diligence law is its enforcement mechanism. Penalties include administrative fines, and the due diligence law will also be criminalized under the Economic Offences Act (Wet op de Economische Delicten). The Economic Offences Act provides the legal basis for imprisonment of the responsible director (feitelijk leidinggevende) if a company violates the due diligence law twice within five years under the same director. The due diligence law is expected to enter into force mid-2022, so that companies have sufficient time to investigate their supply chains.
Although there have not been any formal law reforms in 2019, existing Dutch AML laws been strengthened due to the EU's 5th Money Laundering Directive being implemented. The Netherlands has gold plated certain rules, including those relating to the digital sharing of client information between banks and the authorities.
The scope of legal privilege in general, but also in internal investigations in particular, has been widely discussed in the last year. The Dutch Public Prosecution Service has taken a firm standpoint in the media, arguing that the current system causes unworkable situations involving severe delays that affect their truth finding endeavours. Although debate is still on going, there is a good chance that there will be some changes, whether by law or by agreement in particular cases, to the scope of Dutch legal privilege.
These changes might narrow the scope of legal privilege, for example if it is decided that the Dutch Public Prosecution Service should acquire more power to determine the applicability of legal privilege in a particular case.
The focus of the regulators and the Dutch Public Prosecution Service has mainly been on banks and accountancy firms for AML compliance. In cases involving extensive fraud, AML or corruption, the role of the “facilitators” (eg banks, accountancy firms, notaries) in such transactions is now almost automatically reviewed too.
There are various criminal cross-border investigations currently going on in the Netherlands. The investigation into corruption allegations against a major oil company in respect of the purchase of oil fields in Nigeria and the investigation into corruption allegation against the a large Dutch building company in respect of the construction work for the metro system in Riyadh. A Dutch dredger company has been recently accused in the media of involvement in human rights violations in Angola, and is likely to be investigated by the Dutch Public Prosecution Service. The Dutch authorities regularly collaborate with their overseas counterparts (for example in relation to the LIBOR investigation and the investigation leading up to the ING settlement).
The focus on AML breaches will intensify even more in the coming year not only for banks and accountancy firms, but on all entities that fall within the scope of the Dutch AML regime. At the same time, the chance of the regulators and the Dutch Public Prosecution Service detecting misconduct has increased due to the mass of data available, technological progress, eg in the field of electronic identification mechanisms, and better investigation and enforcement techniques.
This article is part of the Cross-border White Collar Crime and Investigations Review. Read our overviews and insights in other jurisdictions here.
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