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WWFT
Overview of the Prevention of Money Laundering and Financing of Terrorism Act (Wwft)
The Dutch Prevention of Money Laundering and Financing of Terrorism Act (Wwft) forms the cornerstone of the Netherlands' efforts to combat money laundering and terrorist financing. Since its implementation in 2018, it has been instrumental in imposing stringent checks and balances within the financial sector.
Key Aspects of the Wwft
- Risk-Based Approach: Institutions under the Wwft must prepare a risk assessment of their money laundering (ML) and terrorist financing (TF) risks.
- Expanded Scope: The act now encompasses more industries, including crypto service providers and certain real estate transactions.
- Customer Due Diligence: Wwft mandates rigorous customer due diligence, monitoring transactions, and reporting unusual activities to FIU-the Netherlands.
- UBO Register Implementation: From September 27, 2020, the UBO (Ultimate Beneficial Owner) register became operational, further tightening controls.
Governance Requirements Under Wwft
The act stipulates specific requirements for an appropriate internal control framework, emphasizing the compliance function, the audit function, and organizational governance.
- Compliance Function: Entities are required to establish an independent compliance function, proportionate to their nature and size.
- Audit Function: An independent audit function is mandated to check Wwft compliance and the effectiveness of policies and procedures.
- Board Responsibility: A board member must be designated to ensure adherence to Wwft requirements.
Conducting Wwft Risk Assessments
The Wwft requires institutions to conduct thorough assessments of ML and TF risks associated with their clients and services, encompassing client types, products, transactions, delivery channels, and geographic areas.
FAQs
The Wwft Act is the Dutch law aimed at preventing money laundering and terrorist financing. It sets out measures for financial institutions to identify, assess, and manage these risks.
The Wwft Act applies to various sectors, including banking, investment, real estate, crypto services, and more.
Key obligations include conducting risk assessments, performing customer due diligence, monitoring transactions, and reporting suspicious activities.
It combats these activities by requiring institutions to identify potentially risky transactions and clients, thereby preventing illicit use of the financial system.