Netherlands Targets Trade-based Laundering Schemes, Professional Enablers

Dutch authorities are increasingly using financial intelligence supplied by banks and other financial institutions to clamp down on trade-based money laundering, a senior investigator told ACAMS

Recent weeks have seen Dutch national police and agents with the Fiscal Intelligence and Investigation Service, or FIOD, raid used car dealerships and agricultural export companies amid concerns that criminals are laundering vast sums of cash under the guise of legitimate commerce.

Bert Langerak, FIOD’s chief of criminal investigations, told reporter Koos Couvée that new data-sharing platforms and other partnerships between the Dutch government and financial services industry will help identify trade-based laundering schemes as well as unscrupulous attorneys, accountants and other professionals who enable illicit finance.

What follows is an edited transcript of their conversation.

The investigations you disclosed last month involve the integration of illicit cash into the financial system through otherwise legitimate companies. How did those investigations start?

From our side, the investigation into the car dealerships arose from our suspicions of these firms’ involvement in a major VAT [value added tax, or sales tax] carousel fraud, and at the same time the police were investigating how criminal cash was laundered through the sector.

The other investigation, into the vegetable traders, resulted from unusual transaction reports filed by accountants and banks to the FIU [financial intelligence unit] that were passed on to us. The amount of [suspicious] money involved here is €150 million from 2014 to 2019, and while these are a few major players in the sector, these are considerable sums of money.

In both cases we launched a joint investigation with the police that allows us to pool our resources and expertise. This works, and we intend to do it more frequently in the future.

In relation to the vegetable exporters, what can you tell us about your suspicions around the underlying criminality?

There is a strong suspicion that it is criminal money, and there are some lines of inquiry that suggest the money is drug-related.

The money often comes from within the Netherlands in these types of cases, but there are also some elements of cross-border money transport—money that comes this way from neighboring countries such as Belgium and France via cash couriers and underground banking.

What signal are you sending to the private sector by publicly disclosing details of these investigations?

The Netherlands is a major trading hub and that of course is our strength, but these investigations show that criminals are also taking advantage of the large flow of goods coming in and going out, and the money flow associated with that. Our strength also makes us vulnerable in that sense, which is why we consider these investigations so important.

We also wanted to send a warning and raise awareness about the risks of traders getting involved in these types of schemes. Once you get into business with criminals it’s very difficult to get out. Once you start making, for example, 30 percent of your turnover from cash, then say you don’t want that anymore, you run the risk of losing your business, and angering the wrong people.

So we want to raise awareness with certain businesses. If you think it’s odd that someone comes in with a plastic bag stuffed with €80,000 worth of cash on a Saturday morning, maybe you should ask some questions.

Do you suspect that entire sectors may be affected by this type of criminality, so that large volumes of cash transactions no longer appear suspicious?

We do not have a clear view of it at the moment, but it could also be that the problem is broader than just these two sectors. It’s possible. After all, the criminal network know better than anyone else that if certain sectors are relatively small with a limited number of players, that it is also possible to influence the norm.

These investigations are important in part because they challenge the idea that unusually large cash turnover is quite normal. Actually, that’s always very much in question. So as a company you have to ask: Is this normal or am I helping launder criminal money? Maybe you should report it to the FIOD or the police, or ask your bank: Is this normal? How does it work?

The investigations are likely to spark conversations within banks on what percentage of cash turnover should be viewed as suspicious. What’s your view?

In car dealerships in the Netherlands it is not at all normal to pay in cash, usually cash represents only a very small percentage of turnover. We need to look into this further, but basically if there are a number of companies that have a high percentage of turnover in cash, then it is doubtful whether all of this is normal, legitimate trade.

We see sometimes that the gatekeepers in the system, like banks or accountants, assume that a certain cash percentage, say 30 percent, is normal in the car trade or agricultural sector. With these investigations we are trying to raise awareness throughout the entire chain to encourage people to take a more critical view.

Banks may want to pay more attention to this. If they’ve previously thought 5 percent of turnover in cash is normal, then maybe they should set the threshold at 0 percent for a period, and see what they find.

Criminal networks are your ultimate targets, correct? Not the companies that may be abused or the gatekeepers who may fail to flag their transactions.

Yes. In principle, we are not interested in the gatekeepers such as banks and accountants. They have to take preventative measures, properly comply with their legal obligations and abide by the rules of the game, but they’re never the target for us.

We try to get to the top of the criminal organization, to get to the next level, because in the end it’s all about targeting the integration of criminal money into financial or logistical systems, tackling the mixing of criminal with legitimate money. Our goal is to remove the junk from the system, and to stop it from coming in.

This is one of the goals of Dutch investigators partnering with the financial sector?

Yes. In these two cases alone you see very large amounts. If a handful of companies can launder €150 million over a period of a few years—you could be talking about billions being laundered. The Netherlands, as a strong trading nation, is vulnerable to this, and we are working with banks to solve that problem and clear out the mess from the system.

Beginning next month, the four largest banks in the Netherlands will receive intelligence on suspects as part of a new partnership, the Serious Crime Task Force. How will this initiative assist investigations?

There are two main lines of approach. The task force operates at the subject level and what is important there is to exchange knowledge and expertise [on suspects], and that will be very helpful.

Of course you want to go after certain individuals or companies, but ultimately you also want to tackle the whole thing. So we also cooperate at the level of the phenomena, in this case trade-based money laundering, which is perhaps even more important. You want to understand what’s going on and how you can defend yourself against it as a government.

What you also see in the task force is a focus on facilitators—accountants, lawyers, notaries, and corporate services providers who play a role in mixing illicit money with legal trade, inventing complex corporate structures or setting up underground banking schemes for criminals. We also do this in an international context.

The agreement for the Serious Crime Task Force also describes a new investigatory focus on brokers.

There are people who connect the criminal underworld with professional enablers active in the legitimate economy. Connecting these networks is often a profession in itself.

Contact Koos Couvée at

Topics : Anti-money laundering , Know Your Customer
Source: Netherlands
Document Date: August 16, 2019