The trust sector is the gatekeeper for a wide range of enterprises and conduit companies, with €8,000 billion flowing through the sector annually. In the mind of the public, such massive cash flows are not infrequently associated with tax evasion and money-laundering practices. The Dutch trust sector is currently under close scrutiny, and has attracted the attention of Dutch and American government bodies, regulatory authorities and NGOs.
Incidents and new laws and regulations
Recent and earlier findings of studies by De Nederlandsche Bank indicate that the Dutch trust sector has insufficient demonstrable insight into the risks as a result of inadequate client investigations and records of the findings.Furthermore, it appears that insufficient monitoring of transactions is taking place, and that there is insufficient insight into Ultimate Beneficial Owners and the origin and destination of income and assets. In essence, this means that the key requirements of ethical and controlled business operations are not being met.
It is expected of trust offices and their directors that they know the risks and take effective measures to control them. In addition to adequate client investigations and transaction monitoring, this primarily applies also to controlling an internal culture which results in ethical conduct.
Regulation on Sound Operational Management
The new Regulation on Sound Operational Management relating to the Act on the Supervision of Trust Offices will focus primarily on independent monitoring inside trust offices to ensure effectiveness of the measures taken. If trust offices are unable to organise this themselves, they will have to contract it out.