On 9 April 2020, the draft Act amending the Act on the Supervision of Trust Offices 2018 (Wet toezicht trustkantoren 2018, the Wtt 2018) (the Amendment Act) was published for public consultation.
The Amendment Act proposes to change a number of provisions of the Wtt 2018 in order to promote the integrity of the financial system in the Netherlands. According to the explanatory notes to the Amendment Act, it has become clear in recent years that the measures in place to tackle money laundering in the Netherlands are inadequate. A money laundering action plan was drawn up to improve and intensify the approach. As part of this plan, the Dutch Central Bank (De Nederlandsche Bank, DNB) was asked to report on the trust sector earlier than scheduled. At the end of 2019, DNB released the ‘Supervision of Trust Offices 2019’, which contained an initial analysis into compliance with the stricter requirements that were introduced for the trust sector with the entry into force of the Wtt 2018 as of 1 January 2019. The report concluded that during 2019 DNB determined that the sector had not yet finished incorporating the new stricter requirements. An important common denominator in the outcome of investigations was that there were still shortcomings in the implementation of the mandatory client investigation requirements and the recording thereof.
In view of the past incidents and the DNB’s views shared with the Dutch Parliament in the beginning of 2020, it has been decided to further regulate the trust office sector. The new measures proposed in the Amendment Act are in line with the money laundering action plan and measures recently taken by the Dutch government in the context of combating tax avoidance and tax evasion. The measures include a prohibition of certain services involving particularly high integrity risks:
- trust offices will no longer be allowed to offer (services in relation to) so-called conduit companies (doorstroomvennootschappen) and a general prohibition will apply in relation to such companies. A conduit company (also referred to as an in-house company) is a company belonging to the same group as the trust office which the trust office uses for the benefit of one or more customers. These companies are, among other things, used for consultancy services, trade services, lending and commercial exploitation of intellectual property rights;
- trust offices will be prohibited from providing trust offices in case the client, target company or ultimate beneficial owner is resident or established in a high-risk third country. It is believed that such countries with strategic deficiencies in their national legislation to prevent money laundering and terrorist financing pose a significant threat to the EU’s financial system, and that the combination of trust services and these high-risk third countries lead to irresponsibility high integrity risks; and
- trust offices will be prohibited from providing trust services if this involves countries deemed non-cooperative in the field of taxation. The prohibition applies to trust services provided to clients, target companies and ultimate beneficial owners from any such non-cooperative country.
The public consultation ends on 7 May 2020.