How to navigate the regulatory and compliance landscape when doing business in the Netherlands

Increasing compliance requirements in the Netherlands are bringing greater complexity, higher fines – and a rise in specialist outsourcing. Our experts Bertil Seigers, Head of Regulatory & Compliance Services, and Jos van Loon, Compliance & Regulatory Counsel, explain why.

Compliance requirements for companies doing business in the Netherlands are getting tougher. Failing to fully comply risks significant financial and reputational consequences.

Stricter compliance regulations are widespread across Europe and companies need to be fully aware of the consequences of falling short of these higher compliance standards in financial terms – but also in harder-to-measure reputational damage.

For example, in April this year a major Dutch financial institution reached a €480m ($574m) settlement with prosecutors in the Netherlands over money laundering allegations. Former board members are being investigated over failures around anti-money laundering (AML) legislation.

But it’s not just the major financial institutions who face increased scrutiny: smaller firms must also ensure they dedicate time to their AML and know your customer (KYC) processes. Earlier this year, the Dutch financial supervisor Autoriteit Financiële Markten (AFM) reached out to smaller firms to remind them that local compliance laws extend to the third parties they work with. So, it’s something the AFM is taking seriously.

This rise in compliance checks and fines comes as EU (and UK) regulators target companies failing to implement EU AML regulations.

The regulatory landscape is also changing with further legislation expected in 2024 in line as the European Commission proposes ambitious new laws to fight money laundering. These include directly enforceable European customer due diligence rules and the introduction of a central European AML authority. New corporate social responsibility (CSR) legislation is also in the pipeline. This will require companies to take CSR into account when managing business risk.

Who is responsible for Netherlands funds AML requirements?

So where does responsibility for compliance with AML legislation fall? It ultimately rests with the company executives. So it is possible that board members and partners of firms could be held personally liable for failings under criminal law. In addition, in-house risk and compliance teams’ responsibilities continue to grow as the compliance landscape becomes increasingly complex.

Challenges over meeting compliance requirements include:

• Stress and higher demands on the team
• Higher overall costs (with more resources required to monitor and co-ordinate business actions)
• Less time for team members to focus on complicated exceptions and emerging risks, or do strategic governance work

Outsourcing compliance cost-effective for doing business in the Netherlands

One solution to the expense and complexity of the ever-changing Netherlands regulatory landscape is to outsource compliance work to a trusted partner.

Outsourcing can save time and money, helping you to understand the policies needed to keep up with new legislation and providing the right processes and software.

As demand for these services grows, outsourcing is being embraced by an increasing number of businesses operating international.

In a recent survey of 94 managers and 219 investment companies, the AFM found that 78% outsource some of their activity – and more than half of these respondents (51%) said they outsource compliance, risk and audit processes. In a follow-up statement last summer, the AFM urged companies to do more to control the risks associated with increased outsourcing; so, it’s crucial to choose your third-party providers carefully.

A good outsourcing partner will:

• Keep the company updated with new legislation and regulatory requirements
• Ensure compliance policy (whether new or already developed by the company) is appropriate and specific to the business
• Understand how to implement the policy

General business templates are too broad as compliance policies must be tailored to your company’s operations and risks.

The bottom line is that you need a partner with expertise in this area. And you must fully understand your risks.

Why Intertrust Group for compliance solutions in the Netherlands?

Choosing Intertrust Group as your trusted outsourcing partner will allow you to manage the ever-increasing cost and time demands of compliance obligations.

We offer:

• An experienced outsourcing partner with global compliance knowledge, talent and capabilities
• Local knowledge, with the infrastructure to manage changes in compliance legislation
• Economies of scale, due to our centre of excellence in India which provides cost-effective administration
• Software infrastructure meaning clients do not need to buy this or build a new team