#79: AML; the end does not justify the means

The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. This week the FATF published its report on the Dutch anti-money laundering system and the extent to which it complies with FATF measures and the degree of effectiveness. The report shows several interesting findings. One of these findings relate to the effectiveness of the FIU. We question the report on this point based on the findings of the Netherlands Court of Audit.

First, the FATF praises the Netherlands for its robust domestic co-ordination and co-operation on AML/CFT issues at both the policy and operational levels. On the role of the FIU it reports that the FIU plays a major role in the production and dissemination of financial intelligence to the investigating parties, both proactively and upon request. It receives a significant amount of information from obliged entities on subjective and objective money laundering indicators. The report states that the FIU analytical products are of high quality. Remarkable is that the FATF asserts that the lack of comprehensive statistics on the usage of FIU disseminations in police investigations and on the number of disseminations left unattended in the police database is a minor concern. We question however the effectiveness of all the AML notifications that have to be done and whether it ways up against the burden that is put on the professionals and if it does not violate some basic human rights.

The past year showed a sharp increase in the number of notifications of unusual transactions, according to the FIU in its recently published annual review 2021. Especially banks and since recently also crypto service providers, are (increasingly) reporting unusual transactions under the Dutch AML laws. In 2021, for example, more than 1.2 million reports were made. This is an increase of more than 500,000 compared to the previous year. It is striking that this enormous increase in reports of unusual transactions did not lead to more suspicious transactions. In fact, the number of suspicious transactions fell by 7% to less than 100,000.

The report by the Dutch Court of Audit states that this information is still too inadequate for investigative agencies to easily select the transactions that are most suitable for a criminal investigation. The 80 or so FIU employees probably have difficulties keeping up with the flood of notifications and filtering them for the investigative authorities. This is completely understandable, as 1.2 million reports is no small matter. In addition, deliberately failing to comply with the obligation to report is a punishable offence in itself. Together with legislation that is too broad in scope, this may mean that reports of “uninteresting” transactions are made too quickly for fear of negative consequences, while it is already clear in advance that the FIU will not follow up on these notifications. This calls into question the effectiveness of the system in its current form.

The Court of Auditors is also critical of the current state of affairs. In the aforementioned report it says that the Dutch approach to the risk of money laundering is progressing, but is still not enough. In particular, the very substantial efforts of private parties – such as the many reports from banks – could be better utilized. “There are therefore opportunities to combat money laundering more efficiently and effectively, (…) In our opinion, the reporting chain for unusual transactions is ripe for a next step,” the Court of Audit said.

However, the Council of State that recently published its advisory report on a new Money Laundering Action Plan Bill of law is critical. Although this report is focused on a bill of law, the criticism could be taken at heart in general. First of all, it recognizes the important function of (among others) banks as gatekeepers in the fight against abuse of the financial system. Nevertheless, it believes that the joint approach to money laundering by banks, supervisors and investigative authorities entails major risks. Risks of unjustified exclusion from society, the infringement of fundamental rights, and even risks of stigmatization and discrimination. In light of a lack of efficiency of the current system, one may question whether these risks are acceptable. Proportionality should always be the starting point. “The end does not justify all means, especially if those means imply far-reaching infringements of fundamental rights,” according to the Council of State.

In our practice we regularly encounter cases where the risks mentioned by the Council of State become reality. We endorse the goal of combating money laundering and terrorist financing. However, we must guard against a system in which a large number of reports prove to be ineffective, while entailing far-reaching risks for those involved. We therefore welcome the recent published reports in the Netherlands and hope that the FATF will also keep the human rights in mind.

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

#21: Presumed guilty unless proven innocent?

The presumption of innocence is a basic principle in the criminal law system. It is based in article 6 (2) of the European Convention of Human Rights. It states that ‘everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law’. The presumption of innocence dictates that the burden of proof lays with the prosecuting authority. This also entails that in principle the right to remain silent cannot be used against you. However, In Dutch case law we see a development – especially in relation to money laundering – that remaining silent can be held against you. Are suspects nowadays presumed guilty unless proven innocent? Does the presumption of innocence no longer exist?

The Dutch Supreme Court is quite clear on the fact that using the right to remain silent by a suspect cannot be used as evidence. The Supreme Court repeated its earlier ruling of 1997 in its decision of 16 September 2014: the circumstance that a suspect refuses to give a statement or refuses to answer a certain question cannot be used to proof the suspicion. The silence of the suspect can be used in elaborations on the evidence if the suspect did not give a reasonable explanation for a circumstance which in itself or in relation to the further evidence can be considered as a reason for the crime. The Dutch Supreme Court finds itself in good company on this matter. The European Court of Human Rights is also strict when it comes to the prohibition to use the fact that the suspect used his fundamental human right to remain silent as evidence. In this respect for instance the cases Murray against the United Kingdom and Telfner against Austria are interesting.


The possibility to use the ‘silence’ of the suspect is mostly used in money laundering cases in the Netherlands. As explained in Lawlunch #09 the money laundering jurisprudence shows who committed the crime from which the money originated or at what moment or where does not have to be proven. If ‘there is no other explanation possible that the source of an object is a crime or if it is ‘common knowledge’ it is sufficient to come to a conviction. The circumstances on which it is based that the objects derived from a crime vary greatly. As soon as money laundering typologies are at stake an explanation can be asked from the accused about the source of the money. This statement has to be concrete, verifiable and not beforehand unreliable. If the suspect does not give a verifiable explanation for the heritage of the money the ‘circumstantial’ evidence is enough to come to a conviction.If the explanation of the suspect is concrete, verifiable and not beforehand unreliable the prosecutors office has to investigate this explanation in order to further substantiate their suspicion. If the prosecutor fails to do so the suspect needs to be acquitted.

The foregoing thus means that the suspect is ‘forced’ to not use his right to remain silent in money laundering cases, if the circumstances need an explanation. The Dutch Supreme Court allows this to happen. Is this a breach of the right to remain silent? Or is this a breach of the presumption of innocence?

In this respect the case of Zschüschen versus Belgium  on which the European Court on Human Rights decided on 2 May 2017 is interesting. The suspect in this case, Mr. Zschüschen is convicted of tax fraud in the Netherlands. The European Court of Human Rights was to decide upon the question whether not giving a statement while he was suspected of money laundering was a breach of the presumption of innocence. The suspicion related to five transactions of in total € 75.000 Mr. Zschüschen made on a Belgian bankaccount. These transactions were reported by the bank as ‘unusual transactions’. These reported ‘unusual transactions’ in combination with the fact that no income was known of mr. Zschüschen created a suspicion of money laundering. In that respect Mr. Zschüschen was asked were the money came from. He stated that he earned this money but he refused to give the name(s) of his employee(s). The Belgian Court convicted Mr. Zschüchen for money laundering, the fact that he did not give a concrete clarification on the source of the money was used to support the indirect evidence. The court also takes into account that Mr. Zschüschen has a criminal record with drug related crimes and that there is no known income of him in the Netherlands, were he lives.

The question before the European Court of Human Rights is whether this burden of proof on the suspect in these circumstances breaches article 6 of the European Convention of Human Rights. The European court judges that there is sufficient indirect evidence in order to require a statement on the source of the money. If this statement is not given, this absence of a statement is allowed to be used support of other (sufficient) indirect evidence. The European Court however emphasizes that using the right to remain silent as such cannot be used as evidence. Hence, there has to be enough indirect evidence in order to trigger the requirement for the suspect to give an explanation. Not giving an explanation only supports the indirect evidence that the money has a criminal origin.

Returning to the questions raised in the introduction of this Lawlunch; yes, the presumption of innocence still exists. The defence however has to be very critical towards the indirect evidence presented in order to avoid that the presumption of innocence would be breached. Only if there is enough indirect evidence when it comes to a suspicion of money laundering that the money origins from a crime it is not a breach of article 6 of the European Convention if the absence of an explanation on the origin of the money is used as a circumstance which supports the indirect evidence.

In our opinion the defence has to be very critical on the indirect evidence the prosecutors service presents. Is this evidence sufficient to require an explanation of the suspect? It is up to the defence to assist the judge in assessing the indirect evidence in these kind of cases.

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.


#15: Fundamental rights are not always stretched to fit the purpose

Procedural errors are the thorn in the side of lawyers. At least, the (lack of) consequences of such errors. In Lawlunch #02 we explained how the system for compensation due to procedural errors works in the Dutch criminal law. Case law shows that it is an uphill battle to get procedural errors acknowledged and to receive compensation for these errors the government made during investigation. In tax law other criteria are applicable when it comes to procedural errors. These criteria and the interpretation by the courts are very refreshing.READ MORE

#02: ‘You have to learn the rules of the game…’

…and then you have to play better than anyone else.’

These famous words of Albert Einstein seem to be key in many legal disputes and procedures. The criminal procedural code of a country provides the rules for conducting a criminal investigation and the – potential – criminal case afterwards. These rules do not only have to be obeyed in the courtroom, obeying the rules during the criminal investigation is just as important. If the investigation authorities in the Netherlands do not play by the rules, this could (or should) lead to (serious) consequences. Not only should the party involved be compensated for disadvantages in the investigation against him, in our opinion this is also an effective way to control and improve the system. If errors can be made by the authorities without any consequences, there is no reason for them to try to avoid such errors in the future.READ MORE