From May 5 to May 10 this year, TDCC participated in the ACAMS Annual Conference (Association of Certified Anti-Money Laundering Specialists) held at the RAI Amsterdam International Exhibition and Congress Centre in the Netherlands. The delegation was led by two vice presidents from the Intermediaries Compliance & Inspection Department and the Legal Affairs & Compliance Department. The conference attendees included officials from EU member states and global international organizations, as well as compliance professionals from private companies, consulting firms, and Regtech companies. The conference focused on the impact of the upcoming new EU anti-money laundering regulations and the latest practical developments in anti-money laundering and counter-terrorist financing. Topics included the latest developments in EU anti-money laundering regulations, AI’s benefits in anti-money laundering and counter-terrorist financing, cryptocurrency regulations, international sanctions, and the conflict between financial crime prevention and data protection. Attendees could participate in topic discussions. They could also participate in voting regarding the issues involved, raise questions, and interact with speakers via the ACAMS conference app.
One keynote address was “The dilemma of transaction monitoring and personal data protection in anti-money laundering.” A voting item during the conference was “Do you think Europe’s data protection and privacy regulations undermine efforts to combat financial crime?” Interestingly, 80% of participants believed that while both aspects are crucial, more emphasis should be on combating financial crime. Another voting item was “Should financial institutions be authorized to share large volumes of transaction information to uncover money laundering networks effectively?” Again, 80% of participants agreed that analyzing large volumes of transaction information is an effective means of tracing money laundering crimes. In comparison, only 20% believed that sharing transaction information constitutes mass surveillance and infringes on individuals’ privacy rights.
Besides, the speakers introduced the cooperative model of domestic banks in the Netherlands, including its legal basis, operation methods, effectiveness, and public concerns about privacy infringement. This can serve as a reference for how banks in our country can cooperate in anti-money laundering efforts:
The Netherlands’ Transaction Monitoring Platform (Transactie Monitoring Nederland, TMNL) Example:
1.Origin
TMNL originated from a series of roundtable meetings hosted by the Dutch Central Bank (DNB) in 2017 and 2018. It was established by the five major Dutch banks (ABN AMRO, ING, Rabobank, Triodos Bank, and Volksbank) and has been in operation since 2021. According to the Dutch Banking Association (NVB), an estimated €16 billion is laundered annually in the Netherlands. In 2018, Dutch authorities enforced regulations aggressively, resulting in constant fines for banks. Among all, ING was fined € 775 million for failing to identify the ultimate beneficial owners of accounts and monitor suspicious transactions. Due to the challenges banks faced in anti-money laundering practices and the implementation of the Netherlands’ National Cross-Sectoral Money Laundering Action Plan, the five major banks began researching joint transaction monitoring in 2019. On July 8, 2020, the five major banks announced the signing of the TMNL shareholder agreement, establishing TMNL Pvt. Ltd., and continued to advocate for amendments to the Dutch anti-money laundering regulations to permit joint monitoring. Through TMNL, participating banks can comprehensively monitor and respond to financial crimes, detect potential unusual transactions, as well as enhance the safety and transparency of the Dutch financial system.
2.Legal Basis
The anti-money laundering regulations in EU member states must be implemented based on EU anti-money laundering directives. The currently effective directive is the Fifth Anti-Money Laundering Directive (implemented since 2020). The Netherlands has enacted the “Anti-Money Laundering and Counter-Terrorism Financing Act” (Wet ter voorkoming van witwassen en financieren van terrorisme, WWFT) based on this EU directive, defining the gatekeeper functions and obligations of banks in anti-money laundering and counter-terrorist financing, which is the basis for TMNL’s establishment. Additionally, the EU passed the Anti-Money Laundering and Terrorist Financing Regulation (AMLR) on May 30, 2024, which will be implemented from 2027 onwards. The development of TMNL is also influenced by AMLR, which will be explained in detail in the section discussing the future development of TMNL.
3.Operational Methods
In the past, banks individually monitored transactions, identified suspicious patterns, and reported them to the Financial Intelligence Unit (FIU). The FIU would then investigate these reports and forward them to criminal investigation agencies if necessary. However, banks’ individual suspicious transaction reporting had limitations, as criminal groups could disperse their transactions across multiple banks. Therefore, through close inter-bank cooperation, anti-money laundering and counter-terrorist financing can be combated more efficiently.
Participating banks can monitor large volumes of financial transactions in real-time via TMNL and using machine learning and AI to identify potential unusual transactions. In its current execution and operations, TMNL should adhere to the regulations for handling personal data and protecting privacy stipulated by the EU’s General Data Protection Regulation (GDPR). Thus, only corporate transactions are monitored, and the data provided by participating banks is anonymized. When TMNL detects potential unusual transactions, it sends alerts to the participating bank, which alone can link the transaction to the original personal data.
Through data sharing, participating banks can fully understand transaction patterns and cooperate with regulatory authorities, the FIU, and investigation agencies. They can provide more detailed transaction patterns and crime clues and comply with Dutch and EU anti-money laundering regulations. This cooperative model also improves monitoring efficiency, reduces repetitive work among banks, and lowers costs.
4.Benefits
TMNL’s benefits include faster detection of new suspicious transaction patterns and reduced crime opportunities. TMNL has tested various scenarios, focusing on human trafficking, tax fraud, and drug trafficking. It verified that joint transaction monitoring provides more meaningful alerts than individual banks and benefits both banks and the FIU.
