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Netherlands

Despite Covid-19, there was no stagnation in the investigation and prosecution of white collar crime in the Netherlands. The Dutch regulators and the Dutch Public Prosecution Service (DPPS) remained focused on the fight against money laundering and corruption. A collective transaction monitoring entity was established by five Dutch Banks to jointly monitor payment transactions for signals that may indicate money laundering.

For large Dutch out-of-court settlements, a policy reform entered into force which introduces an assessment by an independent review committee. The Netherlands remains an active jurisdiction for cross-border white collar crime and investigations in 2020 and we expect this trend to continue in 2021.

 

Investigations trends/developments

The Dutch regulators and the DPPS continue to prioritise the fight against money laundering and corruption. The focus remains on AML compliance by gatekeepers such as banks, accountancy firms and notaries. For example, the DPPS is investigating ABN AMRO for alleged breaches of the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (the AML Act).

In a market-first, five Dutch banks (ABN AMRO, ING, Rabobank, Triodos and de Volksbank) joined forces in the fight against money laundering and established a collective transaction monitoring entity called Transaction Monitoring Netherlands (TMNL). TMNL will focus on identifying unusual patterns in payment traffic that individual banks cannot detect. The banks will jointly provide their payment data to TMNL, which will monitor the aggregated information for signals that may indicate money laundering.

A&O Amsterdam advised the banks on the foundation and establishment of TMNL in mid-2020. The first joint monitoring is expected to take place in 2021. Although TMNL is currently limited to the five banks, it is expected that other banks will be able to join in the future.

Significant law reforms impacting corporate criminal liability

In recent years, the amounts paid in Dutch out-of-court criminal settlements have increased significantly. Further to mounting criticism that these settlements lack transparency and judicial oversight, the Dutch government is working on a proposal for a judicial review mechanism for large criminal settlements. In anticipation of this judicial review, a policy reform entered into force in September 2020 which introduces an assessment of out-of-court criminal settlements with a fine of EUR200,000 or a total amount of EUR1,000,000 or more by an independent review committee.

This review committee consists of a former white collar defence lawyer, a former criminal judge, a professor of criminal (procedure) law and two former public prosecutors. Three appointed members of this committee will assess whether the settlement proposal is appropriate and reasonable. For this assessment, the committee will consider a draft settlement agreement, a statement of facts and a draft press release, and will organise two hearings behind closed doors to allow the DPPS and the suspect and its counsel to present their views on the proposed settlement. The review committee is expected to review its first settlement proposal in 2021.

The DPPS published a revised version of its Instruction regarding the Investigation and Prosecution of Foreign Corruption (Instruction) in October 2020. The Instruction and its predecessors give a useful insight into the priorities of the DPPS regarding prosecuting bribery and corruption. The previous version of the Instruction stated that the DPPS would not, in certain circumstances, prosecute facilitation payments. The revised version of the Instruction does not include this statement. Although the DPPS did not provide any explanation for this alteration in the Instruction, it could mark a stricter approach being taken by the DPPS to facilitation payments.

Internal investigations – key developments

As in previous years, there is public debate in the Netherlands regarding the scope of legal privilege in corporate investigations. A connected development is the release of a draft bill for consultation that proposes limiting the scope of legal privilege in tax matters. This draft bill proposes that the legal privilege of lawyers only covers information that is directly linked to lawyers’ activities for the determination of the legal position, representation and defence of their clients and advice before, during and after legal proceedings This would, for example, mean that communications regarding tax advice or other legal advice that is not directly linked to the aforementioned activities would fall outside the scope of legal privilege if information is requested by the Dutch tax authorities. The draft bill was met with criticism, including from the Dutch Bar Association and the Royal Notarial Association. Critics believe that, if the draft bill passes into law, this would erode legal privilege.

In June 2020, the DPPS announced that it wishes to increase cooperation with lawyers retained by a suspected company to conduct an internal investigation. The DPPS recognises the benefit of such cooperation, in that it reduces pressure on the authorities. The current Dutch legal framework lacks concrete guidelines regarding sentencing leniency after self-investigation and self-reporting. However, recent developments suggest that such action by a suspected company may be taken into account when a settlement amount is determined. This announcement by the DPPS sparked debate in the Netherlands as to whether lawyers routinely retained by a company should be involved in an internal investigation. Some say that a company’s external lawyers may lack independence, while others believe that independence is not an issue, and emphasise the practical benefits of this cooperation. We expect this debate to continue in 2021.

Sectors targeted by law reforms or enforcement action

The Dutch regulatory authorities and the DPPS remained focused on compliance with AML and corruption regulations by the financial services sector, including financial institutions, payment service providers and accountancy firms. Specifically, the authorities paid more attention in 2020 to the quality and future resilience of financial institutions’ data management in relation to AML. This is partly due to the fact that financial institutions are seeking more access to personal financial data in order to comply with AML regulations.

There was also more emphasis on cyber security in response to the increase of complex cybercrime offences. As almost all sectors are susceptible to cybercrime, the Dutch government is putting more emphasis on the awareness of the duty of care incumbent on companies to monitor cyber security risks and take mitigating measures. The Dutch Minister of Justice and Security recently criticised the lack of effectiveness of enforcement in this regard, and expressed an aim to, inter alia, start a legislative procedure to oblige all vital service providers under the Cyber Security Act, such as banks, to meet a minimum digital security level.

Cross-border coordinated enforcement activity

In recent years, the Netherlands has actively worked to increase its cooperation with foreign investigative and prosecutorial agencies. Since mid-2018, it has been a member of the J5 Group, which consists of the tax enforcement authorities of the Netherlands, Australia, Canada, the UK and the US. These authorities share intelligence, gather information and conduct investigations in order to combat cross-border tax crime.

The J5 Group noted a number of successes in 2020, including a globally coordinated “day of action” in relation to a suspected offshore tax evasion scheme. The action was part of an investigation which started with information obtained by the Dutch tax authority.

The J5 Group started using the electronic platform Financial Criminal Investigation (FCInet) for its information sharing. This is a decentralised virtual network that enables the J5 members to compare, analyse and exchange data anonymously.

The Netherlands is also one of the participating states in the European Public Prosecutor’s Office (EPPO). The Dutch public prosecutor Daniëlle Goudriaan was appointed as one of the European Prosecutors of the EPPO, which is expected to become operational in early 2021 and is intended to combat various forms of fraud, money laundering and corruption.

Financial crime issue predictions for 2021

The impact of Covid-19 on the investigation capacity of the DPPS and Dutch regulators has been limited, since the majority of prosecutors and investigators were able to continue their work from home. The only type of investigative activity that has been postponed since March 2020 is the execution of dawn raids. On this basis, it is likely that the external kick-off of a number major investigations has been postponed, and therefore likely that the lifting of Covid-19 related restrictions will bring to light a number of pending investigations.

There has been a shift of focus with regard to the enforcement of international sanctions. Investigative and prosecutorial capacity has been increased and we have seen the enforcement focus shift from flagrant offences by individuals and small companies to large international companies that may not have effective compliance programmes.

This article is part of the Allen & Overy Cross-border White collar Crime and Investigations Review. Please visit the review homepage for our overviews and insights in other jurisdictions. 

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