The biggest risks of money laundering and terrorist financing identified

Real estate, foreign (offshore) structures, and foundations are among the greatest risks for money laundering and terrorist financing in the Netherlands. This is evident from the third National Risk Assessments (NRAs) for Money Laundering and Terrorism Financing, which were submitted to the House of Representatives on Wednesday.

Both NRAs were conducted by the Scientific Research and Documentation Centre (WODC) of the Ministry of Justice and Security. The 2023 NRA on Money Laundering identifies the 18 largest money laundering threats. These include private and commercial real estate. These include money laundering through the use of front men and/or front men, the use or misuse of the services of professional service providers such as notaries, and the use of ABC transactions and loanback structures.

Offshore
Foreign (offshore) structures also pose a significant risk of money laundering. Foreign legal entities and offshore structures offer criminals seeking to launder money concealment opportunities that, due to the international element, can complicate a money laundering scheme and hinder its detection. For example, the holding of real estate in the Netherlands by offshore companies – as owners or mortgagees – offers criminals opportunities to invest illegally acquired funds.

Foundations
The 2023 NRA Terrorism Financing Report lists the 12 largest terrorist financing threats. These include foundations with little transparency regarding their finances and no self-regulation. The relatively simple establishment of foundations offers the opportunity to finance terrorism in a concealed manner and with a semblance of legitimacy. As an example, a case is cited in which an expatriate traveler established a dozen so-called "charity" foundations and solicited funds on Islamic forums for aid campaigns such as those for Syria, Afghanistan, orphans, toys, wells, or nurses.

Policy response
In the cover letter to the House of Representatives, Minister of Justice and Security Dilan Yeşilgöz writes that it is up to a new cabinet to follow up on both NRAs and to issue a policy response in due course. The second NRA on Money Laundering and the second NRA on Terrorism Financing were submitted to the House of Representatives in 2020. The first NRAs were implemented in 2017.