#54: People can make honest mistakes

Making mistakes is human. It can happen to anyone. If you’re wrong, you don’t necessarily do something wrong intentionally. No, you make a mistake while your intentions are right. There is no criminal intent involved. A mistake should therefore not be legalized to criminal intent. A mistake is not the same as acting fraudulent. And fortunately the Amsterdam Court of Appeal shares this opinion.

In its judgment of 3 June 2020, the Court of Appeal of Amsterdam ruled in a case in which the defendant was primarily suspected of having intentionally filed an incorrect VAT return. The inaccuracy was caused by the declared amount of turnover, which was too low. The Court of Appeal acquitted the defendant with respect to the primary charge, because there was no question of a ‘declaration provided for by the Tax Act’. After all, the tax return had not been filed within the required time period, see in that respect also the judgment of the Supreme Court of 28 June 2016. Subsequently, the suspicion was the use of a false document, i.e. a false declaration.

The Court of Appeal ruled that this was a declaration of turnover that usually amounted to a fixed, round amount each month. The turnover that was not declared in this specific declaration related to specific invoices that were not related to the recurring activities of the company. These related to the buy-out of someone from a company. They were therefore incidental invoices. The Court of Appeal ruled that it must be “considered possible” that these invoices were overlooked. There is simply not enough evidence to conclude that the employee deliberately did not include this turnover in the declaration. The Court of Appeal refers to indications in the file that show that someone, in consultation with the defendant, needed money for specific purposes, but according to the Court of Appeal “solid evidence” is lacking.

Where the Amsterdam District Court had still considered that filing the tax return had been organized in such a way “that nowhere in the chain of business operations any form of effective control of the turnover tax to be paid took place and so the considerable chance of filing wrong tax returns was knowingly accepted”, the Court of Appeal ruled otherwise. The Court of Appeal ruled that the specific employee had the task of submitting the turnover tax returns. It concerned a fixed amount per month and was therefore not complex. The situation for this specific period was incidental. According to the Court of Appeal, there was no policy or work process that caused the significant chance of an incorrect tax return and that chance was knowingly accepted. According to the Court of Appeal, it must be considered possible that the error was made by mistake.

In our opinion, this is a correct judgment. A few indications that there could be a motive for fraudulent acts is not enough to conclude that fraud was committed. This requires hard evidence. If this is not the case, then the judge should give the suspect the benefit of the doubt and “consider it possible” that the person involved did not act criminally culpable.

Do you have any questions about the above or would you like to exchange views? Please contact boezelman@hertoghsadvocaten.nl or boer@hertoghsadvocaten.nl.


 

#53: Money laundering: typologies vs. indicators

In the international fight against money laundering, the Financial Action Task Force (FATF) is the international organization that indicates money laundering typologies, by studying methods or techniques of money laundering. These typologies are used in criminal investigations as facts and circumstances which can construe a suspicion of money laundering. In the Netherlands, the Financial Intelligence Unit (FIU) is the national organization where unusual transactions can be reported. The FIU also publishes money laundering typologies. However, on 16 April 2020, the Dutch Anti Money Laundering Centre (AMLC) published an updated version of money laundering indicators. The question is: what is the difference between indicators and typologies and can all indicators be used as facts and circumstances to create a suspicion of money laundering?

According to AMLC, money laundering indicators can be divided into three different subgroups: 1) money laundering typologies, 2) facts which are considered common knowledge and 3) other indicators. The AMLC also states that these categories of money laundering indicators play an important role in raising suspicions of money laundering as well as in the actual evidence of money laundering. We wonder whether each money laundering indicator can play a role in establishing a suspicion or proof of money laundering.

First of all, AMLC gives an exhaustive list of the money laundering typologies. These typologies are the same as established by the FATF and by the FIU. These are more or less objective characteristics that, as studies show, indicate laundering of the proceeds of crime.

The second subgroup concerns facts which are considered common knowledge; these are facts which everyone is expected to know. On the basis of case law, the AMLC has drawn up a list of common knowledge facts established by case law. It should be noted that this list is not exhaustive and that a large number of these facts have only been established as facts of general knowledge by lower courts. This means it is still possible to argue whether such fact is indeed a fact of common knowledge. After all, the question what can be considered as common knowledge is by no means always clear. Nevertheless, AMLC states that these facts can be used as indicators at the start of an investigation. In our opinion, this should be treated with caution, especially since the interpretation by the AMLC can only be judged in a much later stage in legal proceedings.

Finally, the AMLC pays attention to other indicators. These are characteristics that according to the AMLC indicate money laundering, but are not a fact of common knowledge and have not (yet) been identified as money laundering typology. With regard to the other indicators, reference is made in particular to the OECD handbook and to various FATF reports. The status of these other indicators is unclear to us. We believe that this ‘other’ list cannot yet be used to create suspicion or be used as evidence of money laundering. After all, it is with good reason that this group of other indicators has not yet been identified as a typology. The Explanatory Memorandum to the Dutch Money Laundering Act states clearly that the Public Prosecutor’s Office and judges can use money laundering typologies for evidence of money laundering. The subgroup of other indicators has not been mentioned here and thus should not be used.

In our opinion it is important to remain critical of the money laundering indicators used to construct a suspicion of money laundering. There is a risk that the Public Prosecution Service will conduct investigations on ‘vague’ grounds. It is therefore important that the defense is alert here. But that also applies to the Public Prosecution Service itself. It must be prevented that the Public Prosecution Service only investigates money laundering indicators without actually investigating the heart of the matter: the question of whether there has been a predicate offence. Such a lenient attitude in the investigation would not benefit the finding of the truth and increasingly places the burden of proof on the accused. We also wrote about this problem in Lawlunch #40.

Moreover, it is important to always place certain money laundering indicators in the right time frame the alleged facts took place. After all, the fact that something is seen as a money laundering indicator now, does not mean that this also yielded a red flag ten years ago. On 11 December 2019, the District Court of Rotterdam also rendered an enlightening judgment on this. The Court ruled that the so-called money laundering indicators in that case can not be qualified as that a-typical in that period of time that the suspect should have known that the money derived from a crime.

In short, if the Public Prosecutor’s Office starts an investigation solely on money laundering indicators, it is important to be extremely critical. In any case, you should ask yourself the following question: is the money laundering indicator a money laundering typology or a fact of common knowledge? And, can these facts and circumstances also be qualified as money laundering indicators at the time the alleged facts took place?

Do you have any questions about the above or would you like to exchange views? Please contact boezelman@hertoghsadvocaten.nl or boer@hertoghsadvocaten.nl.


#52: Being acquitted sometimes just isn’t enough

News is available at any time of the day and it is freely accessible. And the news, even the old, can always be found through search engines like Google. Of course, this also applies to news about suspected criminal offences. Even if those suspicions eventually turn out to be incorrect. Although an acquittal for a suspect is certainly the most newsworthy of all, in practice the media unfortunately in general do not treat it this way. As a result, the news in which the person concerned is associated with the suspicion of criminal offences often remain to appear prominent on the internet. Should the acquitted suspect accept this?

Messages in the media about an unjustified suspicion of criminal offences can get in one persons’ way of life in general. All parties you deal with in daily life can find this information with a simple internet search: social contacts, a future employer, a financial service provider. For an acquitted suspect it is frustrating and damaging to be confronted with this all the time. This may even be experienced as an unjustified punishment.

Recently, the Dutch newspaper NRC reported “good news for innocent people with a contaminated reputation”. NRC brings to the attention a decision of a Spanish court. It concerns a case in which a Spanish psychologist, acquitted of abuse, continued to be confronted with all the accusing media reports when he was searched for via an online search engine. In the first eight results, only articles about the accusations emerged. The acquittal could only be found on the second search page.

The psychologist complained to the national Personal Data Authority. This authority ordered Google in 2017 to block the search results, except for the information about the acquittal. The Spanish court does not decide so rigorously on appeal: Google is free to show all news items, but the acquittal must be shown as the first google hit.

There has been a lot to do about the ‘right to be forgotten’. In fact, the question was always whether or not the information should be removed from the internet. It also led to the possibility to use this link to make a request to Google to have information removed from the search engine. But that possibility does not yet guarantee success for all cases.

So what can you do if the request for information removal about a suspicion from the past is not being granted? Because, for example, it is a fact that there was a suspicion of a criminal offence at the time and therefore the information at itself is correct? For that situation the decision as was taken by the Spanish court about which information should appear first, can perhaps mitigate the outcome of a Google search.

Being acquitted sometimes just is not enough. Of course, a compensation for lawyers fees and damages after an acquittal helps to recover from such an unpleasant experience. However, media can also be part of the process which jeopardizes the recovery. This Spanish decision shows that it can certainly be worthwhile to involve media law and a media law specialist in the aftercare of criminal proceedings that have ended successfully for the former suspect.

Do you have any questions about the above or would you like to exchange views on this? Please contact boezelman@hertoghsadvocaten.nl or boer@hertoghsadvocaten.nl.


#51: COVID-19, capacity problems and choices

In the Netherlands, courts and the Department of the Prosecutor’s Office (DPO), are facing severe capacity shortages. These capacity problems will not decrease the upcoming period. Due to the outbreak of the coronavirus, the Judiciary decided to close the courts, tribunals and special colleges as of Tuesday 17 March until at least 6 April 2020. This week it was decided that the closure will continue after 6 April 2020. Only urgent cases will continue. The DPO will postpone red-handed detentions. They are limited to urgent, serious cases. Each case will be weighed up; taking into account circumstances such as the fear of repetition and the safety of others.

This means that a lot of cases will have to be postponed until after this uncertain period will end. The courts and the DPO will then have a lot of catching up to do which will put even more pressure on the judiciary system. This situation calls for choices. But how do we make sure that those choices are equal and fair?

Article 167(1) of the Code of Criminal Procedure gives the Public Prosecution Service the power to decide independently whether or not prosecution should take place as a result of an investigation that has been initiated. The decision of the Public Prosecution Service to prosecute lends itself only to a very limited extent to a substantive judicial review. Pursuant to Article 12 of the Code of Criminal Procedure, an interested party can request the court to order the Public Prosecution Service to prosecute the facts after all. But what considerations are made in this respect and what are the grounds for prosecution or investigation? In a recent decision, the Court of Appeal of Amsterdam decided that the Public Prosecution Service does not need to proceed with a prosecution due to capacity problem. This was despite the fact that after a criminal investigation it could possibly be established that documents were forged. The Court of Appeal puts forward the following reasons:

  • The Court observes that partly in connection with the increased need to deploy police officers for personal security, the police and the judiciary are struggling with considerable capacity shortages. In view of this, choices are inevitable, and this justifies a more limited capacity in criminal law;
  • Furthermore, the Court finds that the alleged false document has not led to any financial disadvantage for the complainant.

In view of the above consideration the Court holds that a large-scale international investigation does not outweigh the interest of the complainant. In this respect the Court deems it necessary to place some blame on the complainant as well. After all, a quick search on the Internet would have made it clear that the defendant is associated with a large-scale fraud. The complainant had omitted this simple Internet investigation before she placed an order for millions with the defendant. Apparently, the court of appeal is holding this against the complainant.

Although we understand that capacity problems require certain choices to be made, we believe that these choices must be well substantiated. Why is one case prosecuted and why does the other ‘get away’? Policy choices should be clarified to the public so that everyone can appeal to this.

The Court of Appeal is now giving some substance to this. Apparently, forgery does not have to be prosecuted if the victim has not suffered any direct financial disadvantage as a result and if time-consuming and costly international investigations have to be carried out as well. One apparently does not outweigh the other. Whether these were actually the considerations of the Public Prosecution Service is unknown. We believe that the Public Prosecution Service should be transparent about this, so that the shortage of capacity does not lead to arbitrariness but to well-founded policy choices that are the same for everyone. Also a suspect should be given the opportunity to put forward arguments why his case should not be prosecuted given certain policies of the government.

Do you have any questions about the above or would you like to exchange views on this? Please contact boezelman@hertoghsadvocaten.nl or boer@hertoghsadvocaten.nl.

#50: A human rights violation: from bad to worse?

In Lawlunch #34 we already wrote on the October 2018 decision of the European Court of Human Rights (ECtHR), in which a breach of the European Convention on Human Rights (ECHR) by the Netherlands in connection with the detention conditions on St. Maarten was established. The case concerned a suspect who was detained in a cell at the police station in Philipsburg. These cells are not suitable for pretrial detention. Nevertheless, this suspect was kept there – much – longer than the 10 days that would be acceptable according to human rights. The reason was that the suspect could not be transferred to the Pointe Blanche prison on Sint Maarten, because security could not be guaranteed there. The ECtHR held that Article 3 of the ECHR had been violated: the prohibition of torture and inhuman or degrading treatment or punishment. It appears that not much has changed since then.

Recently Mr. George asked the ECtHR for help as well. He had been remanded in custody in the same cells at the police station in Philipsburg as was the case in the October 2018 decision of the ECtHR. The reason? The Pointe Blanche prison on the island was too full. The ECtHR imposed a provisional measure on 17 December 2019 on the Netherlands, stating that measures should be taken with respect to the situation of Mr. George. The ECtHR can take such a provisional measure based on Rule 39. In the decision of 4 February 2005 in the case of Mamatkulov and Askarov vs Turkey the ECtHR decided that such a measure is legally binding.

The lawyer of Mr. George – Sjamira Roseburg – has requested Mr. George’s immediate release under these circumstances. This request was not successful. Mr. George was transferred to the Pointe Blanche prison instead. Exactly: to the prison which was too full. In view of the fact that measures were taken concerning Mr. George’s situation, the ECtHR terminated the interim measure. But does this ‘measure’ in practice serve the human rights of Mr. George – and other detainees?

The Public Prosecutor’s Office on St. Maarten is of the opinion that the cells in the police station in Philipsburg have been improved. In addition, the earlier decision and the measure of the ECtHR does not apply to the Point Blanche prison. In the media, the Public Prosecutor’s Office states:

“This is whether the suspect can be released (whether or not by suspending pretrial detention), or whether space can be created in the Pointe Blanche prison by terminating or suspending the pre-trial detention of a suspect who has been detained in the Pointe Blanche prison or by recommending a convict for early release,” said the Prosecutor’s Office. According to the Prosecutor’s Office, early release of convicted persons is an exclusive decision of the Justice Minister. “If both options are not possible, the Chief Public Prosecutor of St. Maarten will consider whether the detention in the Philipsburg cells can continue.”

Meanwhile, this issue is also on the agenda in the Netherlands and parliamentary questions are being asked to the responsible Minister. He responds: “Sint Maarten has informed me that as a result of the present case, the Public Prosecutor’s Office Sint Maarten has adapted its working method. If a detainee cannot be transferred after 10 days, the Chief Public Prosecutor will assess the seriousness of suspicion and personal circumstances in order to reach a decision in which cases pre-trial detention can be suspended”.

It appears from the answers that the Minister is seriously concerned about the situation of detention in St. Maarten. He regularly consults with the Ministry of Justice and the Prime Minister of St. Maarten on this matter. The Netherlands has also made container cells available for the capacity problem in Point Blanche and has offered St. Maarten that the State Property Company offers support with regard to building improvements and contract management in order to be able to put these cells into use as soon as possible.

But why Mr. George has been transferred to the Pointe Blanche prison instead of being released remains unclear. How and on what grounds the interests at stake are being balanced is not explained. Was the situation of Mr. George also discussed in the consultations between the Ministers? In any case, a sufficient explanation did not reach Mr. George and his attorney. It seems that Mr. George’s situation is going from bad to worse while the Netherlands and St. Maarten are watching. In our opinion the ECtHR should take measures on this situation as well.

Do you have any questions about this subject, are you confronted with a related issue and would you like to discuss this with us? Please feel free to contact us via boezelman@hertoghsadvocaten.nl and boer@hertoghsadvocaten.nl.


#49: A FIOD tradition

At the start of a new year people have the urge to look back at the past year and look out to the upcoming year. At the  Dutch Tax Intelligence and Investigative Service (FIOD) this urge for reflection is almost becoming a tradition. In Lawlunch #37 we wrote about the first published annual report looking back on the accomplishments of the last year and their goals for 2019. 12 months later the FIOD published a new annual report with the title ‘Financial investigation, an increasingly important tool in the fight against crime’. What has the FIOD accomplished and what can we expect?

In 2019 the FIOD has completed 800 investigations of which 305 were on request of foreign countries. This is a lot less then in 2018 in which 900 investigations were completed.

On the one hand the FIOD writes that it is gaining more and more insight in understanding how financial fraud works. On the other hand creating this insight in understanding how fraud works remains an important goal for this year. One of the initiatives that has been started is an intense cooperation with banks. The FIOD is of the opinion that such cooperation with private parties, including banks, helps in the fight against financial crime.

Moreover, the FIOD lists some conducted investigation in the year 2019.  The FIOD conducted an investigation into money laundering and large-scale drug trafficking in a Joint Investigation Team (JIT) with Germany. It was an important cooperation between police, customs and defense provided assistance.

Another example in which the FIOD conducted a joint investigation, but this time with the Dutch police, is the investigation into four car companies which are suspected of cross-border VAT fraud and the facilitation of money laundering in the export of second-hand lease cars. This is a form of Trade Based Money Laundering (TBML) in which goods (in this case cars) are used for the laundering of criminal money. TBML has apparently an important target for the FIOD in 2019 as the FIOD mentions also other investigations into the export of potatoes and onions. The TBML approach will be the first project in which the government and banks collaborate in detecting money laundering schemes. This collaboration started in January 2020. It is thus expected that more TBML cases will be investigated this year.

Another important target for the FIOD in 2019 was corruption and cyberfraud. Some examples from 2019 are named in the report. The FIOD conducted an investigation into Dutch companies who facilitated the payments of bribes into the Brasilian company Odebrecht SA. Allegedly a 100 million euro’s have been paid through Dutch companies. Another accomplishment in the eyes of the FIOD is the fact that the FIOD has put down the Bestmixer.io on 22 May 2019, one of the largest online mixers for crypto currency. According to the FIOD this was a huge success in the fight against money laundering. Again the FIOD stipulated the importance of their international cooperation with the Digital Intrusion Team (DIGIT) of the police, Europol, Luxembourg, France and Lithuania.

For 2020 the fight against money laundering will remain a main target. Their goal is to bring down money laundering in the Netherlands with 5 percent per year. How the FIOD is going to measure this is unclear. What is clear is that the FIOD will intensify their relations with private parties such as banks, but also internationally. As an example the FIOD names their J5 partners from Australia, Canada, the UK and the US. Furthermore the FIOD hopes to intensify their relations with financial centra such as the Arabic Emirates, Dubai, Singapore and Hong Kong.

We just hope that during this fight against money laundering no fishing expeditions will occur and eye remains for the rights of the defendants. Because sometimes this battle against money laundering results in tunnel vision and the investigation is merely focused on money laundering indicators without conducting any investigation to the business reality of a case.

Do you have any questions about this subject, are you confronted with a related issue and would you like to discuss this with us? Please feel free to contact us via boezelman@hertoghsadvocaten.nl and boer@hertoghsadvocaten.nl.

#48: Bring on 2020!

This year is almost coming to an end and what a year it has been! The developments in our practice area have been both interesting and exciting as well as frustrating at times. The developments however all have one thing in common; they bring a lot of opportunities and inspiration. A taste for more, so we are curious of what 2020 has in store for all of us!

For now we hope you enjoy the holidays and that you have time to reflect and relax in order to start the new year with renewed energy and enthusiasm. Happy holidays everyone!

#47: (Mis)trust?

Recently AIJA organized a conference to discuss the experience of lawyers with trusts. The title says it all: “Trusts and Continental law: is this marriage possible?”. The figure of the trust is not treated the same in every jurisdiction, which can cause serious legal clashes. These clashes in practice appear for instance in the form of disputes on the execution of duties by the trustee, issues in the field of succession, disputes on interpretation of duties under CRS, tax planning opportunities and issues, tax disputes and criminal investigations. In the Netherlands the trust stars in many tax disputes which sometimes evolves into a criminal investigation. What do you need to know about the Dutch tax regime?

In the past the tax department has regularly tried to tax Dutch tax payers for the assets which were placed in a trust. These cases developed jurisprudence which basically comes down to the question whether the settlor of a trust could factually use the assets which were placed in the trust  as his own. If the answer is yes, than taxation under income tax laws is possible. If the answer is no, then taxation of those assets it is not possible. In that case only the gift of the settlor to the trust would be taxed. Of course, this was no guarantee that the tax authorities would not start a discussion on the qualification of the assets in the trust.

As of 2010 a new regime was adopted which led to the taxation under income tax laws of so-called “separate private wealth”. The idea is that figures in which private wealth is separated from the wealth of the owner, are deemed to remain part of the property of the owner. In other words, a figure like the trust is transparent under this regime and the settlor will be taxed accordingly. The regime does not come to taxation of the settlor if the separate private wealth was taxed in the country of establishment. According to the Dutch regime this only applies if the taxes that have been paid are reasonable. There are substantial differences between the jurisdictions in which trusts can be established.

The regime also foresees the passing of a settlor. In that situation the assets will be allocated to the heirs of the settlor following the succession laws. If the heirs however can proof the contrary – meaning that that they do not have a legal enforceable right towards the assets in the trust – then they cannot be taxed. If it is not possible to determine the settlor or the heirs, the beneficiary of the trust will be taxed. This regime can lead to the situation that an heir or beneficiary can be taxed under the income tax law, while he did not actually receive anything from the trust.

The settlor and beneficiaries also have an obligation to report their involvement with a figure which is considered ‘separate private wealth’ in their tax returns. Knowingly not reporting this is a criminal act and can even lead to criminal prosecution. Various case studies also show that the source of the funds in the trust could also be a trigger for money laundering suspicions.

With respect to our experiences in tax disputes, mostly beneficiaries end up in difficult positions if a trust is involved. In practice their discussion with the authorities usually boils down to the question whether or not they were aware of their involvement in a trust. But how do you proof that you did not know something?

It is safe to say that the involvement of a trust, usually leads to mistrust of the authorities in the Netherlands. One of the key-take-aways from the conference is therefor that anyone who is confronted with a trust should ask for advise on all involved local jurisdictions. Even though the settlor of a trust might have determined loved ones as a beneficiary of the assets with nothing but good intentions, this does not guarantee a discussion free life for the beneficiary.

Do you have any questions about this subject, are you confronted with a related issue and would you like to discuss this with us? Please feel free to contact us via boezelman@hertoghsadvocaten.nl and boer@hertoghsadvocaten.nl.

#46: To prosecute or to confiscate

Confiscation of the proceeds of crime may take place in accordance with article 36e of the Dutch Criminal Code (CC). This article makes it possible to confiscate proceeds of crime in cases where there has been a conviction. In addition, in accordance with article 36e, subsection 3, CC it is possible, to confiscate proceeds and assets that are obtained by means of other criminal offences if there has been a conviction for a crime committed by the suspect. For these ‘other criminal offences’ a conviction is not necessary but the burden of proof is on the prosecutor to provide sufficient indications that these other criminal offences have been committed and that the suspect has obtained proceeds by committing these offences. In two recent cases we see that the legal protection in a confiscation procedure of proceeds by means of ‘other criminal offences’ is far less then in case of a regular situation.

In a judgment of the Court of Appeal of 10 October 2019 on the confiscation measure, the following situation was at hand. The suspect was convicted of money laundering for having an amount of € 216,904.28 cash at hand while she knew that the money derived entirely or partially from a crime. The Court of Appeal ruled that the mere possession of money does not necessarily qualify as an actually unlawfully obtained advantage. In this case, the Court of Appeal therefor investigated to what extent the money was beneficial to the convict. The Court concluded from the case file that invoices were paid with this money and cash deposits were made. On this basis, the Court of Appeal ruled that the money is an unlawfully obtained benefit because the convict had spent the money and the money was thus beneficial to the convict. On these grounds the court rules that the confiscation measure should be set at € 216,904.28.

In another judgment of the Court of Appeal, also dated 10 October 2019, the Court used a different approach. In this case, the suspect was convicted of money laundering on the basis of having a Rolex and a sum of € 3.615 in cash, knowing that these items originated from a crime. However, the confiscation case relates to an ‘other criminal offence’. The convict was also arrested at the airport with € 180.000 in cash. The convict was not prosecuted for this fact, it only played a role in the confiscation case. The public prosecutor considered this fact to be “another offence” as referred to in Article 36e, paragraph 3, CC. The Court of Appeal stated that in case of “another offence” there need to be sufficient indications that the offence has been committed. However, the Court does not have to determine whether the person is co-perpetrator or perpetrator. Furthermore, it is not necessary to assess whether the convicted person has obtained an advantage through or from the benefits of the money laundering committed by him, but only whether criminal offenses have led to the acquiring of an advantage by the convicted person. The Court rules that the convicted person has not argued nor has it become plausible that he fully or partially held the cash amounts for someone else. For that reason it must be assumed that the convicted person kept the amount of money (exclusively) for himself. The Court rules that the amount of € 180.000 shall be confiscated.

From these examples it derives that it matters whether you are convicted for money laundering or money laundering is qualified as ‘another offence’. In the first situation the Court has to examine whether the convict has benefited from the money. While in the other situation the Court merely examines whether the money derives from a crime. It is then up to the convict to state and motivate that the money was not his. In our opinion these examples show that a confiscation measure based on article 36e, subsection 3, CC does not provide enough legal protection as the public prosecutor has a much lower burden of proof. It therefor creates a wrong incentive for the public prosecutor as it might be more successful to not prosecute someone for some criminal offences but merely start a confiscation claim.

Do you have any questions about this subject, are you confronted with a related issue and would you like to discuss this with us? Please feel free to contact us via boezelman@hertoghsadvocaten.nl and boer@hertoghsadvocaten.nl.


#45: The wind has changed

Until a few years ago, criminal prosecution of tax offences in the Caribbean parts of our Kingdom was not very common. In recent years, the Public Prosecution Service of Curaçao has made its presence in the tax domain and is prosecuting tax offences. In some cases more successful than others. Nevertheless, it is clear that the Public Prosecution Service of Curaçao is wide awake. Very recently, agreements between the Public Prosecutor’s Office of Curaçao and the Tax Authorities of Curaçao were published. These Notification, Transaction and Prosecution Guidelines (ATV-guidelines) lay down which tax cases are eligible for criminal prosecution and which cases will be dealt with administratively. From our experience at Hertoghs Dutch Caribbean we learn that the wind has changed. What can we expect?

It is clear that tax fraud has been underexposed on Curaçao and this also applies to other Caribbean parts of the Kingdom of the Netherlands. The Curaçao Court of First Instance acknowledges this in so many words in earlier judgments. The Court seems to blame this on the tax morale on the island, or rather: the lack of it. On the other hand, Curaçao citizens  blame the Tax Inspectorate for acting arbitrarily against taxpayers, as the tax burden is not evenly distributed. The fact that the tax morale on the island is “underdeveloped” could then be considered a logical consequence. In our opinion, this factor plays a role in the defense in tax proceedings and in tax related criminal proceedings. After all, the principle of trust regarding how things were established in the past is applicable.

However, this does not change the fact that anyone can be pulled into a discussion with the tax authorities or the prosecution service related to not complying with tax law obligations. Especially now that the Public Prosecutor’s Office and the Tax Inspectorate are preparing themselves with the ATV guidelines in order to fight tax abuses. These guidelines are a publication of the agreements made between the Public Prosecution Service, Customs, the Tax Inspectorate, the Tax Affairs Sector (SFZ) and “Stichting Belastingaccountantsbureau” (SBAB). The guidelines describe 1) which cases must be reported, 2) on the basis of which information the cases are selected and 3) which cases are dealt with under criminal law and which cases are dealt with under administrative procedures. In the blog of our colleagues these agreements and the way in which the defense can benefit from them are further explained.

The guidelines suggest that, in addition to the Public Prosecution Service, the Tax Inspectorate will also play an active role in tackling tax fraud. The question is whether this is a realistic target. Only last year, the Tax Inspectorate and the Tax Collector stated in the press that there has been a huge backlog in sending out tax assessments and that the Tax Collector is also forced to leave money ‘on the streets’. The lack of capacity is therefore a problem. At the time, they also announced that they were no longer waiting for the ongoing projects to reorganize the Inspectorate, but that they were setting up the reorganization themselves. It will have to become clear whether the budget problems can be overcome in order to make up for lost time by hiring sufficient personnel.

In the meantime, the Public Prosecutor’s Office might not want to wait for this to be sorted and take matters into its own hands…

Do you have any questions about this subject, are you confronted with a related issue and would you like to discuss this with us? Please feel free to contact us via boezelman@hertoghsadvocaten.nl and boer@hertoghsadvocaten.nl.