by Wendy Braanker*

 

03-06-2008

In its report “Combating money laundering and terrorist financing”, the
Dutch audit office says the Netherlands is doing too little to clamp down on
money laundering and cut off the supply of funds to terrorists.

It concludes that the chances of such practices being detected and punished
are small. The reason is a lack of capacity and in some cases also
expertise, not to mention the inadequate exchange of information among
investigating agencies and supervisory bodies concerned.

The audit office draws tough conclusions: terrorist financing isn’t being
tackled adequately, and the results of efforts to combat money laundering
are disappointing. The report is strikes a pessimistic note. “Despite
government measures, laundering and the terrorist financing are not being
adequately prevented, the chances of detection and punishment are small, and
too little use is made of the possibility to confiscate criminal funds.”

Worldwide
This is not only a problem faced by the Netherlands. The International
Monetary Fund (IMF)
has previously estimated that on a worldwide scale, each
year between two and five percent of the total flow of money is laundered.

Money laundering means making illegal funds legal and at the same time
disguising their illegal origins.

In the case of terrorist financing, criminals use the legal economy to fund
illegal terrorist activities. These practices are a danger to the financial
system and undermine public confidence. In addition, of course, they are a
danger to public safety.

Organised crime, with which money laundering is inextricably linked,
presents a direct threat to public order and security, says the audit
office.
According to a study commissioned by the Dutch Finance Ministry, the figure
for the Netherlands falls at the top end of this margin. The ministry puts
the Dutch figure at around five percent of the national income (the total
output of goods and services plus exports, minus imports).

This is no less than 18.5 billion euros a year for the Netherlands alone.
The public prosecutor’s office has not investigated the reliability of this
estimate, but it does conclude that the problem is immense.

Lack of leadership
The audit office blames the foreign, finance and justice ministers for
providing insufficient direction: “The ministers responsible should take on
a clearer leadership role.” The report concludes that hardly any targets are
set for organisations involved in combating money laundering and terrorist
financing. For example, the office says agreements should be made with
investigating agencies on the number of cases they are expected to uncover.

Tough criticism
The three ministers concerned are none too pleased with the audit office’s
tough criticism. They dispute the conclusion that efforts to combat money
laundering achieve few results, claiming it is based on the wrong criteria.

But the ministries have also made commitments. They say the capacity of the
police, the tax service’s investigative department (FIOD-ECD) and the public
prosecutor’s office are to be increased. The development of financial
expertise in the police force is one of the priorities.

Combine expertise
The audit office puts forward not only criticism but also possible
solutions. For example, the report says it may be valuable to pool existing
knowledge in the field. “Combine expertise on the different forms of
financial and economic criminal activity, and make this an explicit task of
the Financial Expertise Centre,” the report recommends. This centre is a
collaboration between the national security service (AIVD), the Authority
for the Financial Markets (AFM), the tax service, the Dutch central bank,
the National police services agency (KLPD) and the public prosecutor’s
office (OM).

The good news is that there is to be considerably more financial elbowroom
for the investigating agencies. The report shows that in the coming years
the government will be investing a lot more money in the “Security starts
with prevention” programme.

 

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