Client due diligence and reporting requirements in the notarial profession
Notaries are required to report unusual transactions that may be related to money laundering or terrorist financing to the Unusual Transactions Disclosure Office, officially called FIU-Netherlands. This is pursuant to the Money Laundering and Terrorist Financing (Prevention) Act (Wwft).
Even if it concerns a proposed transaction that is not (yet) executed. The Wwft applies to almost the entire field of activity of notaries, except family and inheritance law.
Under the Notary Act, all clients wishing to have a transaction carried out by the notary must have their identity established by the notary and verified by means of a valid and original proof of identity. The degree of risk posed by a particular client or transaction determines the extent of the scrutiny the notary is required to conduct under the Wwft. For example, heightened scrutiny is mandatory for clients holding politically exposed positions (PEPs). The notary is prohibited from performing work for a client if the client due diligence cannot be completed. If a relationship with the client already exists, it will be terminated in that case. In addition, if there are indications of money laundering or terrorist financing, the notary is obliged to report to FIU-the Netherlands.
Nationals of EU/EEA countries and Switzerland can have their identity verified on the basis of a valid national passport, a diplomatic passport or service passport, a valid Dutch identity card with passport photograph or a valid driving license with passport photograph whose holder resides in the Netherlands. Other persons may have their identity verified on the basis of a valid travel document or a valid alien's document if they have been residing in the Netherlands for more than three months. The verification of identity can also be done by another professional in consultation with the notary.
UBOs of legal entities
The identity of a client legal entity, such as a PLC, an NV or a foundation can be established on the basis of an extract from the commercial register. This can be either an extract in physical form or an extract in electronic form requested by the notary himself. All persons who hold an interest of more than 25 percent in the capital of a legal entity or otherwise have actual control therein must also be known to the notary and have their identity verified if requested. These individuals are also known as UBOs, or ultimate beneficial owners. Every legal entity has at least one UBO, but may have multiple UBOs. If there is no "real" UBO or if there is some doubt as to whether the person identified is the UBO, a person who is a member of the client's senior management is considered a pseudo UBO.
Based on their professional rules, notaries are not allowed to accept or pay out cash amounts above €2,500 as of May 1, 2019. Under the Wwft, notaries are obliged to report cash payments to FIU-the Netherlands. As of July 25, 2018, this reporting obligation applies to cash payments of €10,000 or more, to or by the notary. Given the prohibition in the professional rules, cash payments above €2,500 will in principle not occur. However, the reporting obligation also applies if the client deposits the cash in a notary's account. Cash payments intended by the client to the notary or desired disbursements of €10,000 or more that are not made must also be reported.
The notary has no reporting obligation if any (intended) unusual transactions are discussed in an orientation meeting. Clients are then free to discuss anything with the notary. The legal obligations apply from the moment the notary actually takes up a case and it is clear that the requested transaction falls under the legal regulation. In that case, the notary is obliged to report any unusual transactions referred to in the law to FIU-the Netherlands. By law, the notary may not inform his client of a report.