Skip to content

Netherlands

The Covid-19 pandemic has resulted in fewer criminal enforcements in the Netherlands. Nevertheless, corruption and other types of economic and financial crime remain high priorities for the Dutch enforcement authorities. The Dutch regulators and the Dutch Public Prosecution Service (the DPPS) continue to pay close attention to supervised gatekeepers of the financial system for non-compliance with Anti-Money Laundering (AML) regulations and sanctions law. In cases where a legal entity enters into a settlement with the DPPS, there seems to be an increased focus on the prosecution of individuals.

In the criminal tax field, in 2022 we expect more attention to be given to matters where the integrity of the financial sector is under scrutiny, such as dividend stripping. Cybercrime is high on the enforcement agenda. We also expect more cases that will relate to business responsibility for human rights. A follow-up to the legislative processes surrounding a draft bill related to judicial review of high-value settlements with the DPPS is expected.

Investigation trends/developments

More action against financial gatekeepers

Enforcement action against the gatekeepers of the financial system, such as banks, accountancy firms and notaries, for breaches of the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (the AML Act) continues to increase. Financial institutions have a growing role to play in the detection of money laundering, and risk criminal liability if they do not comply with the AML Act.

Financial intermediaries continue to be a target in (criminal) tax investigations. For example, the DPPS has started an investigation into the role of a large Dutch financial institution in a tax case, due to its involvement in certain dividend-related transactions. In addition, the Secretary of State for Finance has recently announced that tackling dividend stripping is proving to be difficult in practice, despite the existence of an anti-abuse provision under Dutch tax law since 2001. However, the Secretary of State also announced that the Dutch government is working on alternative measures using data available from five Dutch authorities, including the Dutch Fiscal Information and Investigation Service (the FIOD), the Financial Intelligence Unit of the Netherlands (the FIU NL) and the DPPS, in order to tackle dividend stripping more effectively from 2022 onwards. The public disclosure of the cum/ex Files by an international partnership of journalists seems to be contributing to a further focus by the Dutch Tax authorities on the recovery of taxes from taxpayers. This may also lead to criminal investigations into cum/ex trades by the DPPS.

A focus on individuals

The DPPS has become more focussed on individuals in cases where a legal entity has already settled with the DPPS. This trend is in line with the DPPS’s 2020 instruction on high-value settlements, which urges caution when deciding not to prosecute a natural person when a legal entity has entered into a high-value settlement with the DPPS. Under Dutch law, persons who have actual control of the prohibited conduct committed within a legal entity can be held liable for this conduct. 

Mediation being considered for criminal cases

Mediation as alternative dispute resolution is playing an increasing role in the Netherlands. The ‘Innovation Act Criminal Procedure’, a draft bill submitted to the Dutch Parliament in June 2021, contains the provision for a criminal case to be referred to mediation by a prosecutor or judge. Meanwhile, the feasibility of mediation as alternative dispute resolution in tax cases has been receiving increasing attention in Dutch political discussions. We expect the increasing recognition of the role of mediation to extend to complex fiscal fraud cases in the near future. Mediation in tax cases would help both the taxpayers and the Dutch Tax authorities in the continuation of their relationship after the settlement of their dispute.

Discouraging ransom payments for cyber attacks

Cyber attacks have increased in frequency and severity and have impacted multiple Dutch government organisations, knowledge institutions and corporates in recent years. ‘Cybercrime as a service’ is a phenomenon that seemed to be on the rise during the pandemic. As a result, the Dutch government and enforcement authorities are searching for effective methods to track down and prosecute cybercrime. They have advised against paying a ransom in the event of a ransomware attack because a ransom offers no guarantee of data being decrypted and, they say, perpetuates the criminal model. We expect to see an increased focus by the Dutch Data Protection Authority on data loss from cyberattacks. Compliance officers should ensure incident readiness and response to minimise the impact of data loss.

Significant law reforms impacting corporate criminal liability

AML

The EU published four legislative proposals relating to AML and efforts to combat the financing of terrorism (CFT) in July 2021, including:

  • The creation of a new EU authority to improve the supervision of AML and CFT in the EU and cooperation among FIUs,
  • Introducing an EU AML/CFT regulation – this would have direct effect, unlike the current EU AML directives which are required to be implemented in national law.

We expect that the focus on AML and CFT will continue and that the European legislative proposals will lead to domestic AML/CFT law reforms in the next few years.

Enhanced scrutiny of corporate settlements

High-value settlements with the DPPS have been a topic of discussion for years, due to, among other things, the lack of transparency, legitimacy and social acceptance of the criminal settlement process. In response, the Ministry of Justice and Security published a draft bill, which proposes judicial review for high value settlements. Since September 2020 a proposed high value settlement between a company and the DPPS has been reviewed by a committee consisting of a former lawyer, a former judge, a professor of criminal law and criminal procedure and former public prosecutors. This committee hears the views of the DPPS, the company and its counsel behind closed doors, and subjects the proposed settlement to a limited review only. The proposed draft bill imposes an obligation on the public prosecutor to hear the company with the assistance of a lawyer before making a preliminary offer of a high-value settlement. In addition, a written record of the hearing must be made and form part of the judicial review. 

Environmental crime

The draft coalition agreement drawn up by the two largest political parties in the Netherlands in the summer of 2021 sets one of the objectives of the coming government as tackling environmental crime and environmental risks. The two political parties have called for a strong system of permit granting, supervision and enforcement, as well as sufficient enforcement capacity. We therefore expect an increased focus on compliance with environmental laws and regulations.

Ultimate beneficial ownership

A draft bill on the ultimate beneficial ownership (UBO) of trusts and similar legal arrangements was introduced in November 2021, which obliges entities to maintain and centrally register UBO information. The legislation implements the Fifth Anti-Money Laundering Directive (EU) 2018/843 (AMLD5).

Export control

A new European regulation on dual-use goods came into force on 9 September 2021, introducing several new rules and definitions. For example, cyber surveillance items are now subject to export control when they may be intended, in their entirety or in part, for use in connection with internal repression, and the commission of serious violations of human rights and international humanitarian law. In addition, the European regulation harmonises rules applicable to certain services with regard to dual-use items currently regulated at national level, such as technical assistance, and strengthens the cooperation between EU member states in the area of the enforcement of export control regulations. It is important for the compliance officers of exporting companies to scrutinise their framework on compliance with all new rules and responsibilities under the new European regulation.

Internal investigations – key developments

Lawyers and internal investigations

A rule of conduct for lawyers involved in internal investigations was clarified by the general council of the Netherlands Bar (Nederlandse Orde van Advocaten, NOvA) in May 2021. This clarification follows years of public debate on the role of a lawyer in an independent internal investigation conducted before or after an external authority has become involved. The NOvA clarified that lawyers can carry out internal investigations without breaching professional conduct rules. This is in line with our view that lawyers can conduct a proper fact-finding exercise, whilst at the same time acting in the best interest of their clients.

Privilege

There is public debate in the Netherlands regarding the scope of legal privilege in tax investigations. A draft bill proposes that the legal privilege of lawyers and civil-law notary only covers information that is directly linked to a lawyer’s activities aimed at the determination of the legal position, representation and defence of their clients and advice before, during and after legal proceedings. This would mean, for example, that any communication regarding tax 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. The legislative process surrounding this draft bill is currently at a standstill.

Sectors targeted by law reforms or enforcement action

The Dutch Central Bank (the DNB) continues to pay close attention to supervised gatekeepers, including traditional and non-traditional financial institutions. Since 20 May 2020, providers have engaged in exchange services between virtual currencies and fiat currencies and custodial wallet providers must comply with the registration requirement under the AML Act. Acting in breach of the registration requirement is a criminal offence under the Economic Offences Act (WED).

Cross-border coordinated enforcement activity

The European Public Prosecutor’s Office (the EPPO) became operational on 1 June 2021. The EPPO works with 22 participating Member States to investigate, prosecute and bring before a national court various types of criminal offences that affect the EU’s financial interests. The EU body has already opened more than 300 cases, according to the chief prosecutor, Laura Kövesi. An investigation into millions of euros’ worth of VAT fraud is currently being carried out in the Netherlands and other countries, including Germany, Bulgaria and Slovakia. Since the EU budget inevitably affects entities in the financial sector, it is expected that the EPPO will involve these entities in investigations in the near future.

The Netherlands is 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. In 2021, the focus of the J5 Group was on financial technology (FINtech) companies. FINtech companies often market new financial products and payment processes. According to the Internal Revenue Service Criminal Investigation (the U.S. tax enforcement authority participating in the J5 Group), the FINtech industry is used by tax avoiders and money launderers. The J5 Group identified companies that will be subject to investigations by the participating authorities in the J5 Group, following leads suggesting criminal behaviour. Compliance with applicable tax and AML/CFT regulations should be and remain high on the agenda of compliance officers of FINtech companies.

Team High Tech Crime of the Dutch Police continues to play an important role in international cybercrime investigations. It regularly cooperates with authorities from other countries in international investigations into cybercrime, including large-scale abuse of the ICT infrastructure and ransomware attacks. Team High Tech Crime participated in 2021 in the disruption of Emotet. According to Europol, Emotet was more than just malware, as it was offered for hire to other cybercriminals to install other types of malware, such as banking Trojans or ransomwares, onto a victim’s computer.

Financial crime issue predictions for 2022

The Dutch enforcement authorities remain focused on: (i) corruption; (ii) tax fraud; and (iii) cybercrime. We expect authorities to focus more on (iv) business human rights and environmental, social and corporate governance (ESG).

In line with the supervisory plans of the DNB for 2022, we expect to see a continued focus on (further) investigations into potential breaches of the AML Act by gatekeepers of the financial system. In view of the DNB, the efforts of financial institutions in the area of financial economic crime have increased, but not sufficiently. The DNB calls for better cooperation, both between public and private parties and at the European level.

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. 

Recognition

Download the Cross-Border White Collar Crime and Investigations Review

People working in office

The 'Cross-Border White Collar Crime and Investigations Review' analyses the latest developments and trends, and highlights the most significant among the current and emerging issues that white collar crime and investigations in-house counsel should prioritise in the year ahead.