Wwft
Wwft
Wwft (Wet ter voorkoming van witwassen en financieren van terrorisme)
Our lawyers are required by law, in respect of certain services, to conduct ‘client screening’, to ‘monitor’ clients, to investigate the origin of the funds used and to report ‘unusual transactions’ to a national reporting point. These obligations are set out in the Dutch Money Laundering and Terrorist Financing (Prevention) Act (Wet ter voorkoming van witwassen en financieren van terrorisme (Wwft)).
For more information about the Wwft you can consult the menu below.
The Wwft only applies if we give advice or provide assistance with regard to:
- the purchase or sale of properties subject to registration;
- the management of funds, securities, coins, banknotes, precious metals, precious stones or other assets;
- the incorporation or management of companies, legal entities or similar bodies […];
- the buying or selling of shares in, or the buying or selling or the taking over of all or part of businesses, companies, legal entities or similar bodies[…];
- activities in the field of taxation that are comparable with the activities of […] [tax advisors];
- the establishment of a right of mortgage on a property subject to registration; or
- […] act on behalf of and for the account of a client in any financial or real estate transaction”
The Wwft does not apply to our services when determining the client’s legal position. This is also called the exploratory stage. No substantive services are rendered at this stage. However, as soon as these services are rendered, the Wwft applies immediately.
The Wwft does also not apply if we render services to represent a client in a lawsuit, to give advice in the context of a lawsuit or to give advice on instituting or avoiding a lawsuit.
These exemptions also apply if our services relate to one of the aforementioned Wwft services.
If the Wwft applies to the provision of services, the Wwft prescribes that we must conduct a client survey. The client survey consists of, among other things, identifying the client and verifying that the identity stated corresponds with the actual identity. Furthermore, we will have to identify the ultimate beneficial owner (UBO) of a transaction or relationship and take reasonable measures to verify that identity.
The extent of this investigation will depend on the degree of risk of money laundering or terrorist financing. This risk is determined in advance on the basis of various factors laid down in the law, by the government and by supervisory authorities. Examples are: the nature of the services, geographical risk factors, the industry in which the client operates and the way in which the transaction is financed. We are not permitted to render any substantive services until the client screening has been completed in full and in accordance with the Wwft. The Wwft prohibits us from accepting the assignment if the client screening cannot be completed in full and in accordance with the Wwft. In that case, an existing business relationship must also be terminated.
The client screening means that we must research at least:
Natural person:
- the client’s identity and any representative;
- the purpose and intended nature of the business relationship;
- the representative authority of the person acting on behalf of the client;
- whether the client is acting for himself or herself or for someone else;
- whether the client is a politically exposed person (a ‘PEP’);
- the origin of the funds (e.g. money) used in the transaction.
Legal entity:
- who the ‘ultimate beneficial owner’ (‘UBO’) or pseudo-UBO is;
- the client’s identity, any representative and the UBO or the pseudo UBO;
- the purpose and intended nature of the business relationship;
- the ownership and control structure of the legal entity;
- the representative authority of the person acting on behalf of the client;
- whether the client is acting for himself or herself or for someone else;
- whether the UBO or the pseudo-UBO is a politically exposed person (a ‘PEP’);
- the origin of the funds (e.g. money) used in the transaction.
Sometimes we are obliged to take additional measures, in line with the higher risks that have emerged. Enhanced client screening, for example, is mandatory if:
- the client (natural person) or representative (such as a director) is not physically present for identification purposes;
- the client, the UBO or the pseudo-UBO is a politically exposed person (a ‘PEP’); and/or
- there is involvement in a country with a ‘high risk’. This is apparent from the various lists that we have to check.
Part of the client screening for Wwft services is that we are obliged to identify the client, any representative and any UBO or pseudo-UBO. We then have to investigate and verify the given identity. The verification can also be done by another professional in consultation with the lawyer.
Natural person
The identity of a natural person is verified on the basis of a valid and original identity document, such as a national passport, a Dutch identity card or a Dutch driving licence. In consultation with the lawyer, it can be verified whether another proof of identity can also be used. However, if the natural person has another nationality in addition to the Dutch nationality, this person is obliged to always identify himself or herself with a Dutch identity document in the Netherlands.
Dutch legal entity, company or branch office
The identity of a Dutch legal entity, company or branch is verified on the basis of:
- an online extract from the Chamber of Commerce that we have retrieved ourselves;
- a digitally certified extract from the Chamber of Commerce; or
- a deed or statement drawn up or issued by a lawyer, civil-law notary, candidate civil-law notary or a comparable, independent legal practitioner established in the Netherlands or in another European member state.
Foreign legal person or company
The identity of a foreign legal entity or company is verified – depending on the country and the risk – on the basis of, for example:
- an extract from the foreign public commercial register;
- a statement by a foreign lawyer or civil-law notary (or equivalent thereof); or
- a partnership deed.
Through another professional
If we carry out work for a client through another professional who has already carried out a client survey, we may only adopt the results of that client survey if that client survey has been carried out by a:
- lawyer or notary in the EU;
- accountant or tax adviser in the EU;
- Dutch trust office;
- regulated financial institution (excluding a money transaction office (exchange institution)) in the EU.
Such a referring professional must confirm to us that the client screening has been conducted in accordance with the Wwft. In addition, that professional must provide us with all identification and verification details and other details about the client’s identity, any representative and any UBO. Under the privacy legislation, the referring professional requires the explicit consent of the client in this respect.
Once we have received all the information, we will check whether the client screening has been conducted in accordance with the Wwft and our office policy. If this is not the case, we are obliged to take additional measures ourselves.
A UBO ('Ultimate Beneficial Owner') is an ultimate beneficial owner of a legal entity. Part of the Wwft client survey is that we are obliged to investigate who the UBOs are. If there is no UBO or if there is doubt as to whether the designated person really is the UBO, a 'pseudo-UBO' is designated. A client may have one or more UBOs or pseudo-UBOs.
A UBO is always a natural person. The Wwft stipulates that a UBO is any natural person who ultimately owns or controls a legal entity.
UBO of a BV or NV (non-listed companies)Every natural person:
- having a direct or indirect interest of more than 25% of the shares, voting rights or ownership interest; or
- exercising effective control otherwise (being the ultimate policymaker).
‘Interest’ means an interest in the capital, such as a right to profit or the right to the surplus after liquidation. The term ‘effective control’ includes, for example, control by means of an issue of depositary receipts for shares, beneficial ownership, special types of shares with special control and/or profit rights, profit rights under the articles of association, contractual profit rights, voting proxies and, more specifically, being able to dismiss the majority of the directors, to amend the articles of association and to have a casting vote in other material decisions that enable dominant influence to be exercised.
UBO of a foundation (stichting), association (vereniging), mutual insurance company (onderlinge waarborgmaatschappij) or cooperative (coöperatie)Every natural person:
- having a direct or indirect interest of more than 25% of the ownership interest (ownership interest means earnings from capital or from surplus after liquidation);
- holding directly or indirectly more than 25% of the votes in the event of an amendment to the articles of association; or
- exercising effective control otherwise (being the ultimate policymaker).
Every natural person:
- having a direct or indirect ownership interest of more than 25% (ownership interest means earnings from capital, including its profits or reserves, or from surplus after liquidation);
- holding directly or indirectly more than 25% of the votes in the event of a change in the cooperation agreement;
- holding directly or indirectly more than 25% of the votes cast in the performance of the cooperation agreement (other than by acts of management); or
- exercising effective control otherwise (being the ultimate policymaker).
Every natural person:
- who, at the dissolution of the denomination, is appointed as legal successor in the statute of the denomination.
Sometimes, there is no UBO or there is doubt as to whether the identified person really is the UBO. In such cases, one or more pseudo-UBOs must be designated. These are natural persons who belong to the ‘senior management staff’. Several pseudo-UBOs can be designated. In the case of a legal entity, these are the directors under the articles of association. The designation of a pseudo-UBO is a last resort option. In the case of companies, this will almost never occur. For foundations and associations it does occur.
A Politically Exposed Person (PEP). Part of the Wwft client screening is that we are obliged to check whether the client, the UBO or the pseudo-UBO is a PEP. If that is the case, we will have to conduct an enhanced client screening.
A PEP is someone who is entrusted with one or more of the following prominent public functions, has been entrusted for the past year or is about to be entrusted with such a function.
PEP-functions:- head of state, head of government, minister, junior minister or state secretary;
- member of parliament or member of a similar legislative body (e.g. the senate or parliament);
- member of the board of a political party;
- member of a supreme court, constitutional court or other high court that delivers judgments against which, except in exceptional circumstances, there is no appeal, for example in the Netherlands: Council of State (Raad van State), Supreme Court (Hoge Raad), Trade and Industry Appeals Tribunal (College van Beroep voor het bedrijfsleven) (and/or the Central Board of Appeal (Centrale Raad van Beroep));
- member of an audit office or of the board of a central bank;
- ambassador, chargé d’affaires or senior officer of the armed forces;
- member of the management, supervisory or governing body of a state-owned company;
- director, deputy director, member of the board or holder of an equivalent function in an international organization (such as the International Court of Justice, the United Nations, the institutions of the European Union, the North Atlantic Treaty Organization and the World Trade Organization);
- another function similar to the functions listed above.
Some family members of a PEP are also PEPs. This is the case for a parent, the spouse (or equivalent) or a child or spouse of a child (or equivalent).
In addition, a person is also a PEP if he or she is known to have a close business relationship with a PEP.
In respect of Wwft services, we are required by law to report ‘unusual transactions’ to the Financial Intelligence Unit – The Netherlands. In short, a transaction or proposed transaction is ‘unusual’ if it could be related to money laundering or terrorist financing. When we make a report, we are not allowed to inform the client about it (not even in the case of a request based on privacy legislation). This tipping off prohibition is laid down in the Wwft. The duty to report starts when we actually render substantive services for the client.
We may only render substantive services for the client once the client screening has been completed in full and in accordance with the Wwft. However, if the client screening cannot be completed and there are indications of money laundering or terrorist financing, we are also obliged to report the intended transaction.
The Wwft states that lawyers are not bound by their duty of confidentiality when making a report of an unusual transaction under the Wwft, and in that context are obliged to provide (additional) information to the Financial Intelligence Unit – the Netherlands and the Financial Supervision Office (Bureau Financieel Toezicht (BFT)). Our duty of confidentiality is therefore crossed by the Wwft obligation to report.
The obligation to report does not apply during the orientation meeting. Clients may at all times speak freely with a lawyer in order to determine their legal position, as long as no substantive services (advice) are being carried out at that time.
In the case of financial transactions that fall under the Wwft, we are obliged to investigate the origin of the money used for these transactions. This obligation to investigate applies not only to payment via our clients’ account, but also to payment between the parties.
In addition, this investigation obligation also applies if the transaction is financed by means other than money (settlement, acknowledgement of debt, shares or other assets). The starting point of the investigation is the client’s explanation, but we must verify such statement. Therefore, the origin of the funds must also be substantiated and proven by documents, such as bank statements or financial statements. The exact information required depends, among other things, on the origin of the funds. The intensity of the investigation depends on the degree of risk incurred by the client or the transaction.
When complying with our legal obligations under the Wwft, we process personal data. Our privacy statement states how these personal data are processed. The following applies to the personal data that we collect on the basis of the Wwft.
The personal data that we collect on the basis of the Wwft are only processed for the purposes of the Wwft. We must retain these personal data for five years after the end of the business relationship with the client or after the execution of the transaction for the client. If we have made a report under the Wwft, the retention period for the personal data relating to that report will be five years after the report was made.
Contact
Dubbelsteynlaan West 39
3319 EK Dordrecht
PO Box 9069
3301 AB Dordrecht
T: +31 78 630 00 00
F: +31 78 630 00 22
E: info@dekoningadvocaten.nl
Chamber of Commerce number
23065700
VAT number
NL009658129B01