How the IBAN-Name Check can support with Wwft compliance
Banks and financial organisations are increasingly facing fines for failing to implement money laundering measures. Despite the fact that verifying customer transactions has been mandatory under the Money Laundering and Terrorist Financing (Prevention) Act (Wwft) since 2007.
Last year Robeco made headlines when it was fined €2 million for failing to adequately implement procedures to prevent money laundering. A customer deposited 100,000 euros in his account and kept it there for several years. Without raising any red flags, he then had the funds, interest included, transferred to a recently registered private account of a third party.
By implementing the IBAN-Name Check, Robeco can enhance the effectiveness of their verification processes. This ensures that the bank is aware of the account holder and that funds cannot be transferred to an unknown account. In other words, the solution provides financial institutions and organisations with additional assurance about the identity of the customer they want to bring on board, as well as the account number that this customer will use.
Big implications and large amounts
However, Robeco customers are not the only ones who engage in money laundering. Every year, around EUR 16 billion in money laundering is earned from crimes such as drug trafficking or fraud are involved in the Netherlands.
Through the Wwft, the government makes a lot of efforts to control how criminals get this money. Criminals, like poachers and foresters, are always thinking of new ways to hide where their money comes from. In doing so, they target the financial sector, for example, by depositing money in the account of a company in another country with fewer regulations for money laundering or by creating (or having created) fake accounts that make it appear as if the money was earned by an organisation.
KYC: joint fight
In the fight against money laundering and other fraud, the government works together with a lot of parties who join forces in the anti-money laundering chain. These include financial regulators, banks, insurers, notaries and accountants. Based on the “Know Your Customer” (“KYC”) principle, banks investigate their customers’ financial transactions, while supervisors monitor whether these institutions are doing so properly.
Tailoring approach to money laundering
The government is committed to pursuing and restricting criminal activity. Since 2010, more than €634 million has been spent in the Netherlands to catch criminals. Over 740 million euros in missing funds have already been retrieved. While this is an outstanding sum in and of itself, it falls short of expectations. As a result, the bar must be raised, and coordination among anti-money laundering organisations could be improved.
In other words, current monitoring methods can be improved and made more efficient. Innovative solutions can also be very useful in getting old files in order faster and providing new customers with immediate access to the financial system. Bunq is an example of this.
Impact on financial players
Major banks in the Netherlands are likewise becoming more aggressive in their efforts to combat money laundering and fraud. In 2021, nearly 45,000 customer accounts were closed down by ABN Amro, ING, Rabobank, and De Volksbank. For 7,700 of them, this was due to the high risk of money laundering or terrorism financing.
Another encouraging sign is that financial players are investing large sums in organising existing files. Rabobank, for example, is allocating a quarter-billion euros to improve money-laundering controls.
IBAN-Name Check as innovative way to support companies in their Wwft obligation
Current control measures are not effective enough. As a result, organisations in the financial sector, such as insurers, investment platforms, pension funds, and other stakeholders, need to take a smarter and more innovative approach to certain processes.
Companies who are required to comply with the Wwft must check the identification of the individual they intend to make a customer and also examine the flow of money.
With SurePay’s IBAN Name Check, you match the name to the IBAN of new customers. This can be done through a direct connection with the relevant bank.
This method gives these companies further assurance about the identity of the customer they want to bring on board, along with the account number that this customer will use.
A financial gatekeeper can determine whether this person is allowed to access the financial system by running the identity that matches the account number through a PEP or sanctions list database.