Brussels objects to Dutch anti-money laundering project Transaction Monitoring Netherlands (TMNL). Politicians believe the money laundering approach does not fit the new framework of European money laundering rules. Privacy experts are happy with the ruling. Finance Minister Steven van Weyenberg writes this in a letter to the Lower House, the Financieele Dagblad reports (1).
To prevent criminal activities such as money laundering and sponsorship of terrorism, several Dutch banks have joined forces. The result is Transaction Monitoring Netherlands (TMNL), a partnership established by ING, ABN AMRO, Rabobank, de Volksbank and Triodos Bank. Since 2021, these banks have been monitoring business transactions to stop criminal money flows. This is how the banks intend to carry out their monitoring duty, which is laid down in the "Money Laundering and Terrorist Financing (Prevention) Act.
The government welcomes this initiative and even wants banks to expand supervision of money flows. In addition to business transactions, financial transactions by private individuals amounting to 100 euros or more should also be scrutinized. To this end, then-Finance Minister Sigrid Kaag sent the bill "Money Laundering Action Plan" to the House of Representatives in October 2022. The idea is to collect and analyze all payments centrally.
"Criminals often stash sums of money in different banks to stay under the radar. With joint transaction monitoring, banks can better identify unusual transaction patterns. This is expected to lead to better 'hits' and thus contribute to a more effective approach to money laundering," said then-Finance Minister Sigrid Kaag.
European politicians, however, have commented on the plan. They feel that TMNL is not in line with the framework of new European money laundering rules because the Dutch approach would be too strict. Only high-risk customer data would be allowed to be shared under European rules.
The FD highlights that European money laundering rules will affect the Money Laundering Plan bill. After the fall of the fourth Rutte Cabinet, the bill was declared controversial. This means that a new cabinet will not consider the draft bill until it is debated. By then, the European Parliament may have already agreed to a new, overarching European money laundering law.
Brussels wants money laundering investigations to be harmonized in Europe, or in other words, the same rules to be used in all EU member states. "Europe has determined that using all data goes too far, but public-private cooperation remains possible under conditions," said MEP Paul Tang (PvdA), who was closely involved in drafting the new European money laundering rules. He therefore calls the Dutch 'Money Laundering Action Plan' "a nice compromise."
The current finance minister, Steven van Weyenberg, says the European money laundering law will not take effect until 2027. He promises that his ministry will study the European bill more closely. "In doing so, we will also consider what impact the package may have on the controversial 'Money Laundering Action Plan' bill," the minister said.
Since the introduction of TMNL, privacy experts and agencies have been critical of the plan. The Autoriteit Persoonsgegevens described the Dutch money laundering approach as a "banking dragnet" (2). AP board member Katja Mur fears this opens a door ajar for "unprecedented mass surveillance.
"Your payment data show your whole business. For example, whether you spend money on a political party, religious institution or psychologist (...) Moreover, the danger of discrimination and exclusion looms. We have seen before that algorithms can stigmatize people and push them into boxes. The question is whether banks will soon be guided mainly by what a computer tells them," Mur said.
The Raad van State is also skeptical about banking cooperation (3). "The massive scale on which banking transactions will be jointly monitored is unprecedented and means a far-reaching breach of the confidentiality of data of citizens and companies. This does not only concern the right to privacy. This monitoring may also lead to exclusion and discrimination," the advisory body said.
Vincent Böhre of Stichting Privacy First sees nothing wrong with TMNL (4). "Privacy First is resolutely against a dragnet by the joint banks on the complete financial transaction data of Dutch people, companies and organizations and calls on everyone to agitate against this cabinet plan," the foundation's director said.
Dutch fintech company Bunq has already indicated it will not participate in TMNL. Online banks Knab and Revolut are exploring options for participation.
(1) https://fd.nl/financiele-markten/1508586/brussel-keurt-gezamenlijke-witwasaanpak-banken-af
(2) https://www.vpngids.nl/nieuws/ap-waarschuwt-voor-bancair-sleepnet/
(3) https://www.raadvanstate.nl/adviezen/@122774/w06-20-0354-iii/
(4) https://privacyfirst.nl/artikelen/bancair-sleepnet-is-geen-goed-idee/
