Combating money laundering and terrorism financing

The Court of Audit has investigated the policy in place to combat money laundering and terrorism financing. Money laundering is the process of turning money from illegal activities into legitimate wealth in such a way that its illegal origins cannot be traced. Terrorism financing often (but not always) involves the use of legal funds to finance the illegal activities of terrorists. Both money laundering and terrorism financing represent a risk to the integrity of the financial system and to public confidence in the operation of the financial markets. In our audit, we considered how the Minister of the Interior and Kingdom Relations, the Minister of Finance and the Minister of Justice steered their enforcement chains. We also looked at how the various implementation organisations prevent, detect, investigate, prosecute and sanction money laundering and terrorism financing. We did not consider the enforcement of sanctions.

Conclusions

We concluded that the results were disappointing in view of the many measures that the Ministers of the Interior, Finance and Justice had taken to combat money laundering and terrorism financing. Our audit found that money laundering and terrorism financing were still inadequately prevented, that the probability that money laundering and terrorism financing would be detected and punished was low and that the investigation services and the Public Prosecution Service made little use of their powers to seize the assets of criminals. These findings were not expected in view of the ambitions declared by the past five governments and the priorities they have set in the past ten years to combat money laundering and terrorism financing.

Recommendations

We recommend that the Ministers responsible (Interior, Finance and Justice), the supervisors (Dutch central bank, Tax and Customs Administration, Financial Supervision Agency, and the Netherlands Authority for the Financial Markets) and the Board of Police Commissioners set realistic policy ambitions that are consistent with the necessary capacity, expertise and priorities. We recommend that the ministers consolidate the relevant operational information that is currently dispersed over a number of private and public organisations within the enforcement chain as soon as possible. We also think the Ministers should exercise their management functions more clearly and we recommend that the minister draw up a joint strategy based on shared and well-considered priorities. Finally, we recommend that, in consultation with the organisations involved in combating money laundering and terrorism financing, the Ministers of the Interior, Justice and Finance set meaningful performance indicators so that they can gain an insight into the results, steer the enforcement chain and account to the House of Representatives for the results achieved and the resources applied.

Response of the Ministers

The Ministers thought our conclusion that combating money laundering had had little effect was based on incorrect assumptions. They agreed with our conclusions on capacity, expertise and information sharing. The Ministers think their Ministries already exercise their management functions clearly. They undertook to improve the insight available into the measures taken and the problem of financial and economic crime before the summer. This insight would then be used to agree performance indicators and allocate the additional resources that have been made available. The Ministers also undertook to make agreements with the implementing organisations and the supervisors on performance goals and the use of capacity.

Current status

The report was submitted to the House of Representatives on 3 June 2008.