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The Netherlands: a review of cross-border white collar crime and investigations developments

2023 was marked by several new and continuing trends in the Netherlands. The scope of legal privilege remained a contentious issue with the criminal authorities. Internal investigations by lawyers increasingly faced scrutiny by authorities and courts, especially regarding their independence.

Important trends included investigations into dividend stripping, increased attempts by non-governmental organisations (NGOs) and special-interest groups to mobilise criminal and regulatory authorities to take enforcement action, and workplace investigations in response to misconduct in the corporate environment. We expect these trends to continue in 2024.

Investigations trends and developments

Legal privilege

The scope of legal privilege remains a hotly debated topic in the Netherlands. Early 2023, the Dutch Public Prosecutions Service (DPPS) published a draft instruction on legal privilege for public consultation. The consultation was put on hold in May 2023 when the Dutch Supreme Court was asked to issue a preliminary ruling on the scope of legal privilege.  The key question to be answered by the Supreme Court is whether the DPPS can assess whether information is privileged, or whether this assessment should only be performed by a judge. Pending the ruling by the Supreme Court, the Court of Appeal has ordered, as an interim measure, that the DPPS must always engage an examining magistrate to select data or filter it for confidentiality. This has increased protection of legal privilege but is likely to result in delays in ongoing criminal investigations.

Dividend stripping

The practice of dividend stripping refers to the practice of temporarily transferring shares (often of listed companies) for tax purposes, while retaining beneficial ownership of the shares. In 2023, the Dutch tax and criminal authorities announced their focus on combatting dividend stripping, and publicly invited market participants to come forward with information on these practices.

Increased actions by NGOs and special-interest groups

There has been a significant uptick in the number of NGOs and special-interest groups filing complaints with criminal and regulatory authorities to take enforcement action against major corporations and their executives. This includes criminal complaints against major steel and chemical producers and the subsequent opening of a criminal investigation by the authorities. Other notable cases include an action to prosecute Shell for alleged corruption in Nigeria, for which Shell was previously acquitted in Italy. A related bribery investigation was previously dropped in the Netherlands on double jeopardy grounds.

Workplace investigations

There remains a growing prevalence of workplace investigations in response to allegations or complaints of misconduct, (sexual) harassment, discrimination, bullying or retaliation in the corporate environment. These investigations were triggered or influenced by various factors, such as the #MeToo movement and the whistleblowing regulations. Best practices are emerging on how these sensitive investigations should be handled by corporations, either in-house or externally.

Important law impacting corporate criminal liability

Whistleblowing Directive

The Netherlands implemented the EU Whistleblowing Directive on 18 February 2023. Certain parts of the new law have not yet entered into force, such as the provisions on the Dutch Whistleblowers Authority’s new supervisory and sanctioning role. The implementation of these provisions requires further regulations.

Changes include:

  • Greater protection to those that report breaches of EU law.
  • A new requirement that a company must appoint a third party as an additional contact for whistleblowers. 
  • An expanded definition of reporters, now including temporary workers, trainees, and interns.

Sanctions framework

The Dutch government continues its efforts to modernise the Dutch Sanctions Act. It will be brought more in line with existing AML/CFT requirements, eg regarding customer due diligence and reporting requirements. The modernised framework is expected to ease implementation and enforcement of EU sanctions, introducing administrative enforcement powers in addition to existing criminal powers under Dutch criminal law. It is not expected to contain additional bases for national sanctions.

Enforcement of EU sanctions will continue to be a priority for Dutch authorities. The DPPS investigates an increasing number of individuals and entities for alleged violations of EU sanctions, and also started using its powers under Dutch civil law.

Internal investigations – key developments

Recent disciplinary actions before the Disciplinary Court of the Dutch Bar Association (Nederlandse Orde van Advocaten, NOvA) have focused on the rules applicable to lawyers conducting internal investigations.

A new ruling in 2023 clarified that there is a distinction between an investigation carried out in an advocacy role and an independent, or objective, investigation. For the latter there are strict requirements on due process, independence of the investigator, interactions with interested parties (such as employees) and comprehensiveness of the facts included in the report.

Many lawyers use fact-finding to advise their clients in a regular advocacy role on their legal position and to assist them in criminal investigations or litigation. The 2023 ruling should have a modest impact on this work provided that they adequately structure their engagement and communicate transparently about their role. They will continue to be able to fact-find as an integral part of their duties.

There is an increasing body of law, regulation and scrutiny around the conduct of internal investigations, with specific procedures and specialists for different types of investigations, such as workplace investigations and fraud. Not doing an internal investigation in accordance with these increased expectations risks legal and reputational consequences. This means a greater need for proper procedural safeguards, especially considering increased transparency from regulatory requirements, social media, and whistleblowing.

Sectors targeted by law reforms or criminal enforcement

The Dutch government has prioritised combating corruption, fraud, tax evasion, environmental crime, and cybercrime. Some of the notable sectors that have been targeted in 2023 or have been announced as a focus for 2024 are:

  • Financial sector: AML remains high priority for the Dutch Central Bank (DNB), but DNB is proposing reforms in its approach, allowing for more flexibility on some elements of AML compliance. The final version is expected in early 2024. The government is preparing new legislation to strengthen the supervision and regulation of financial institutions (as gatekeepers), including new legislation to expand information exchange. The legislation, which amends, among others, the Anti-Money Laundering and Counter-Terrorism Financing Act (Wet ter voorkoming van witwassen en financieren van terrorisme), aims to enable (i) joint monitoring of transactions by banks, (ii) data sharing between institutions for customer due diligence in high-risk situations, and (iii) a ban on conduit companies and trust services involving high-risk countries or non-cooperative tax jurisdictions.
  • Industrial companies: The Environment and Planning Act (Omgevingswet) came into force on 1 January 2024.  It merges many pre-existing environmental laws, but it also introduces new duties of care for companies that hold permits, such as a prohibition on stopping an activity that mitigates adverse environmental effects. Violations can be sanctioned under criminal law too.
  • Multinational businesses: Ensuring compliance with international sanctions remains a priority for the Dutch authorities. They have increased resources to investigate sanctions violations, and they will continue to do so in 2024. The Dutch Public Prosecution Service has started to use civil action against entities that violate sanctions. Compliance and human right violations in supply chains will also be a continuing focal point.

Cross-border coordinated investigation or enforcement activity

Cross-border coordinated investigations or enforcement activity increasingly use joint investigation teams (JITs) within the EU, as well as through cooperation agreements with third countries such as the U.S. and Switzerland. JITs allow authorities from different countries to work together on a specific case, share information and evidence, and conduct joint operations across borders.

Predictions for 2024

Handling of whistleblowing complaints, especially in relation to harassment or bullying in the workplace:  Whistleblowing complaints can trigger internal or external investigations, reputational damage, litigation, and regulatory scrutiny. In-house legal and investigation teams and GCs will have to ensure that they have adequate policies and procedures to handle such complaints, to protect the rights of whistleblowers and the accused, and to comply with relevant legal and ethical standards

Increased focus on prosecution of sanctions breaches: The soon-to-be adopted modernised Sanctions Act broadens the scope and powers of the Dutch authorities to impose sanctions and to investigate and prosecute violations.

Increased focus on prosecution of dividend stripping: Several European countries, including the Netherlands, have launched investigations against banks, financial institutions, and intermediaries in this regard.

More activism and actions related to environmental, social and governance (ESG) related issues: In-house legal and investigation teams and GCs will have to be proactive and responsive to the demands and expectations of stakeholders, and to anticipate and mitigate potential legal and reputational risks, relating to ESG issues such as climate change, human rights, diversity and inclusion, and corporate governance.

More investigations relating to violations of environmental statutes: The Dutch government has been investing in supervision and enforcement resources in this area.

Looking further ahead

In the context of ESG, we predict a continuing shift from asking ‘is it legal?’ to ‘is it legitimate?’. Authorities will likely scrutinise past behaviour with the benefit of hindsight and applying future standards and social values, which may expose companies to future liability or criticism.

This article is part of our Cross-Border White Collar Crime and Investigations Review. Please click here for our overviews and insights in other jurisdictions.

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