Many are aware that banks are skeptical about crypto currency. One of the reasons for this is fear of money laundering. Dutch banks are in fact obliged to take measures against money laundering. These rules are included in, among other things, the “Act on the prevention of money laundering and the financing of terrorism” (hereinafter: the Wwft). This law stipulates that banks must report unusual transactions to the Financial Intelligence Unit (FIU), which in turn determines whether the unusual transaction is also a suspicious transaction.
When is a transaction unusual?
The Wwft contains rules about when a bank must report an unusual transaction. For example, there are “objective indicators” after which the bank is obliged to make a report to FIU without further investigation. If there is a “subjective indicator”, the bank must conduct an investigation and determine for itself whether there is an unusual transaction.
An objective indicator is, for example, a transaction for an amount of € 10,000 or more, whereby cash exchange takes place in a different currency. Money transfer of more than € 2,000 is also an objective indicator for an unusual transaction.
In principle, a bank has no insight into crypto transactions of an account holder at all. This is different if an account holder purchases or sells crypto currency via his bank account. These transactions are – just like all other cashless transactions – under the supervision of the bank.
The objective indicators say nothing about crypto currency at all. So there are no clear rules when a bank must report a crypto transaction. A Dutch bank must therefore determine itself (via subjective indicators) when it finds a crypto transaction unusual. That happens more often. The number of reports about suspicious transactions involving crypto currencies is increasing sharply.
When banks mark crypto transactions as “unusual” it is difficult to say. Every bank uses its own limits and rules for this, as they fall within the scope of the Wwft. In practice it appears that in any case the following situations can lead to reports:
Trade in crypto currency where the money received is converted into cash via ATMs
Indication of trade in crypto currency via a business bank account
Purchase or sale of crypto currency with a large size or frequency
What to do with questions about your crypto transactions?
If your bank asks questions about your crypto transactions, you are not required to answer. Be aware that your bank will decide on the basis of your answers whether the transaction is considered “unusual”. A good statement can therefore prevent a report. On the other hand, a statement can also be used against you in a possible criminal investigation into money laundering. If you have doubts about what to declare, you can contact a specialized lawyer.
Is your transaction reported?
The fact that you have been asked questions does not mean that a report will certainly be made. In addition, the bank can also make a report without asking you any questions.
Your bank is obliged to keep a report secret. You will therefore not be informed whether a report has been made of your transaction. Even if you ask, the bank will therefore not be allowed to state whether your transaction has been reported.
What happens after a report?
After the bank has made a report, the FIU will conduct an investigation. That investigation determines whether the “unusual transaction” is also a suspicious transaction. If the transaction is not suspicious, nothing else is done with it. If the transaction is suspicious, the file can be submitted to the judicial authorities, who will then start a criminal investigation.
From that moment you can be regarded as a suspect of money laundering. In many cases this will lead to an invitation to make a statement (criminal hearing). Partly based on that hearing, the judiciary will determine whether you will be prosecuted for money laundering.
When is money laundering involved?
It is not easy to say when one is punishable for money laundering. In general it must be said that people often underestimate this. After all, money laundering quickly involves complex financial constructions to disguise black money. In our criminal law, however, the mere receipt of money or crypto currency, while the recipient knows or should reasonably suspect that this money comes from crypto currency, is considered money laundering.
A detailed explanation of money laundering goes beyond the scope of this blog. Perhaps my colleague and I – if needed – will write a blog about this in the future.
Noud van Gemert
Lawyer specializing in cyber crime, property crimes such as money laundering and crypto currency matters.