Identification and the WWFT
Client due diligence and reporting obligations within the notarial profession
Under the Dutch Notaries Act, the notary is required to verify the identity of the client. In addition, the notary is legally obliged to conduct client due diligence and to report unusual transactions to a national government reporting body (FIU-Netherlands). These obligations arise from the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft). Many activities carried out by a notary fall under the Wwft. Services relating to real estate and corporate law generally fall within its scope. The Wwft may also apply in personal and family law matters, for example when the notary provides tax advice.
Client due diligence
The extent of the due-diligence investigation depends on the risk of money laundering or terrorist financing. Circumstances that may influence these risks include:
• whether the client is active in an industry known to be vulnerable to money-laundering practices, or is using funds linked to such an industry;
• whether the client, the transaction or the funds involved have a connection with a country known to pose a higher risk of money laundering or terrorist financing;
• whether the client has appeared in the media in relation to matters that increase the risk of money laundering or terrorist financing;
• whether the notarial services requested are consistent with the client’s profile;
• whether the client holds or has held a prominent political position, thereby increasing the risk of corruption.
The notary’s investigation therefore differs from case to case. Under certain circumstances, the notary must ask additional questions.
The Wwft sets out what must be examined. This includes:
• the identity of the client (and any representative);
• the purpose and background of the requested services;
• whether representatives are authorised to act;
• whether the client is acting on their own behalf or on behalf of someone else;
• for financial transactions: the origin of the funds (or other financial means) used, in order to prevent the use of illegal funds;
• for legal entities and partnerships: the ownership and control structure, and the identification of ultimate beneficial owners (UBOs);
• whether the client or the UBO is a politically exposed person (PEP).
Verification of the client’s identity
Individuals who are nationals of an EU/EEA country or Switzerland can have their identity verified using a valid national passport, diplomatic passport, service passport, national ID card with photograph, or a valid driving licence with photograph, provided the holder resides in the Netherlands. Other individuals must use a valid travel document or valid residence permit. Identity verification may, in consultation with the notary, also be carried out by another qualified professional.
Reporting obligation
For services falling under the Wwft, the notary must report unusual transactions to FIU-Netherlands. A transaction (or intended transaction) is considered unusual if it may be related to money laundering or terrorist financing. Although the notary is bound by professional confidentiality, the reporting duty overrides this. The notary is not permitted to inform the client about a report (including whether a report has been made or is intended).
There is no reporting obligation if an unusual (or potentially unusual) transaction is discussed during an initial exploratory meeting. Clients may therefore speak freely during such conversations. The legal reporting obligation applies only once the notary has formally taken on a case and it is clear that the requested transaction falls under the Wwft.
Cash payments
Under professional rules, notaries may not accept or make cash payments exceeding €2,500. Under the Wwft, notaries must report any cash payments of €10,000 or more to FIU-Netherlands. This reporting duty also applies if the client deposits cash directly into the notary’s bank account.
Intended cash payments of €10,000 or more — or intended disbursements of that amount — that ultimately do not take place must also be reported.
Please note: contrary to the general rules above, our office does not accept any cash payments.
Identity of legal entities and UBOs as clients
The identity of a legal entity acting as a client — such as a private limited company (BV), public limited company (NV) or foundation — can be verified using an extract from the Trade Register. This can be a physical extract or an electronic extract requested directly by the notary.
All natural persons who ultimately own or control the client-entity must also be known to the notary and must provide identification if required. These individuals are referred to as UBOs (ultimate beneficial owners). Every legal entity has at least one UBO, but may have several. A UBO is always a natural person.
If a “real” UBO cannot be determined, or if there is uncertainty, all natural persons belonging to the entity’s senior management are treated as pseudo-UBOs (for example, all statutory directors of a BV). Similar rules apply to other legal forms such as partnerships.
UBO Register
If the client is a legal entity, the notary must consult the UBO Register to verify whether the entity’s UBOs are registered. The UBO Register is part of the Trade Register maintained by the Dutch Chamber of Commerce. A portion of the data in the register is public.
If the UBO information held by the notary differs from the information in the UBO Register, the notary is required to report this discrepancy to the Chamber of Commerce. This is known as the “feedback obligation”. As with reporting unusual transactions to FIU-Netherlands, this obligation overrides the notary’s duty of confidentiality.
Origin of funds
The notary must investigate the origin of the funds used in a financial transaction. This requirement applies even if the funds originate from a Dutch bank account. The notary has an independent duty of investigation, separate from that of the bank.
This duty also applies when payments are not made through the notary’s third-party account (for example, direct payments between parties), and when a transaction is financed with non-monetary assets such as set-offs or shares.
The notary may not proceed with a transaction if it cannot be established that the funds originate from a legitimate source. The extent of the investigation depends on the risk of money laundering or terrorist financing. If the notary cannot complete the investigation satisfactorily, the notary must refuse service and may need to file a report with FIU-Netherlands.