Imagine, your bank can block 'YOUR MONEY' because they think you are spending too much money at your local supermarket, or they block your savings withdrawal to pay for an overseas operation in a foreign hospital, or you want to pay for a new car with cash—Well, it's happening in Holland right now. Worse still, all Dutch banks can collectively ban you from having an account at all, even if you have never done anything wrong!
Translated from Dutch Radar.AvroTros.nl
Banks [in Holland] may jointly examine the transactions of all their customers if it is up to the cabinet [government]. A new bill would give banks the option to exchange transactions and customer data en masse to detect money laundering. Each bank already monitors its customers individually. But that sometimes goes wrong, with dire consequences. That is why critics fear that the bill will lead to a "banking dragnet" that makes it more difficult to become a customer of a bank.
It is hard to imagine that Ruud Zonneveld launders criminal money. He is a 'neat saver', he says himself, who does not invest his salary in crypto or in cash but keeps it in the bank - ING [Bank], in his case. He, therefore, does not understand why he and his wife have received successive messages from ING [Bank]. [The Bank is asking] why did Ruud pay thousands of euros to Albert Heijn [a local supermarket] in his area last year? (The answer: groceries.)
If Ruud does not provide sufficient answers to [the] ING Bank's] questions, this may have 'consequences for the banking relationship', the [ING] bank warns. Ruud fears that he will not be allowed to remain an ING Bank customer. That is why he sends the information requested by ING, even though he thinks it is 'ridiculous' that he is being screened in this way. [he quite rightly] "finds it very strange the way ING treats customers," he says.
ING, Rabobank, ABN Amro, etc.: every bank [every bank in Holland] carries out surveillance
Ruud is not alone. Radar [TV investigators] spoke to several customers who encountered money laundering checks from their banks.
This is how joint monitoring works
The government wants to expand this practice. The idea is that if banks jointly monitor their customers' transactions, they will also catch criminals who have accounts with several banks. The proposed money laundering action plan, therefore, gives banks the option of jointly checking their customers' transactions.
TMNL watches from 100 euros
The five largest banks have set up a separate company for this purpose: Transactiemonitoring Nederland (TMNL). TMNL would collect all transactions above 100 euros to discover unusual patterns. For example, if TMNL thinks that a customer is doing something crazy with his ABN Amro account and his ING account, TMNL will give both banks a signal to investigate the customer. If according to the banks, the customer cannot justify himself, the case is forwarded to the Financial Intelligence Unit.
The Dutch Banking Association is in favour of the bill. The NVB thinks that banks need to question their bona fide customers less often about certain transactions because TMNL is better able to distinguish false alarms from real shady business than banks can individually. The NVB [The Dutch Banking Association] also points out that TMNL only receives 'pseudonymised' data: it only receives encrypted personal data from customers, so TMNL employees do not see names, for example.
Criticism of bill: 'mass surveillance'
However, the Dutch Data Protection Authority (AP) is critical of the bill. The AP "sees a form of mass surveillance that can lead to exclusion and where risks of discrimination can arise." The Privacy First Foundation also has serious objections. Director Godaya Komen says: "There will undoubtedly be small benefits in catching the crooks, but it really comes at the expense of a large part of the population that is being watched."
The AP and Privacy First see problems not only in joint transaction monitoring but also in another part of the bill: the obligation to inquire. Banks would be obliged to inquire among themselves about customers they consider to be unreliable.
Every bank is obliged to check the transactions of its customers in order to prevent money laundering and terrorist financing. If a bank finds a transaction 'unusual', it can ask the customer to justify it, as with Ruud. The bank also reports what it considers to be unusual transactions to the Financial Intelligence Unit, which falls under the Ministry of Justice. The FIU decides whether a transaction is suspicious enough to pass on to the police.
In the meantime, the bank can decide for itself whether it still considers the customer with the unusual transaction reliable. If not, the account can be blocked or the customer can even be sent away completely. (Although the bank cannot simply turn away private customers, because everyone is entitled to a so-called 'basic payment account'.)
This is how the duty of inquiry works for banks
A bank, for example, ABN Amro, makes a 'risk profile' of you when you want to become a customer. ABN Amro wonders: how likely is it that you will launder? According to the bill, if the bank gives you the label 'high risk', it must ask other banks whether they have ever dealt with you. If ABN Amro asks ING questions because you want to become a customer, and ING has ever sent you away as a customer because it thought you were too 'high risk', then ING must tell ABN Amro. There is a [big] chance that ABN Amro will also refuse you.
But there are many more times when inquiries can be made about you. For example, if ABN Amro checks your risk profile again as part of regular checks, or if ABN Amro considers one of your transactions to be unusual. And ING does not only have to answer the question if it has ever sent you away but possibly also if it has blocked your bank account or sent you a warning message in the context of money laundering checks. If Ruud Zonneveld wants to switch to another bank, the obligation to inquire could make that more difficult, experts fear, because his bank may have to say that he was once vetted. [blocking his transfer]
This can have disastrous consequences for a customer, such as discrimination and unjustified exclusion.
Fleur le Roy, a lawyer at van Ardenne & Crince le Roy Advocaten
Black lists due to the obligation to inquire?
Moreover, you do not know exactly why a bank labels you as 'high risk'. The legal standards for this are 'open and open to multiple interpretations', explains Fleur le Roy. As a lawyer at van Ardenne & Crince le Roy Advocaten, she specializes in anti-money laundering legislation. “There is no clear-cut answer for customers as to when exactly they qualify as high risk,” says Le Roy. ‘The open standards can cause institutions to make unintentional incorrect estimates. This can have disastrous consequences for a (potential) customer, such as discrimination and unjustified exclusion, possibly resulting in irreversible financial and reputational damage. This is already happening in practice.”
Le Roy calls the risk that banks will use a blacklist in the context of the duty of inquiry 'real'. After all, a blacklist would help banks to check for money laundering as efficiently as possible. Simon Lelieveldt, who was head of supervision at the NVB until twelve years ago, also fears that the obligation to inquire will lead to a 'de facto blacklist' that will exclude people. “I think a lot of people are afraid of the monitoring that is happening in China or by the Stasi in Germany,” he says. "We shouldn't end up there."
What next with the bill?
The House of Representatives is critical of the bill and on 22 February sent a long list of questions and objections to Finance Minister Kaag, the main minister behind the bill. She has already hinted that she wants to negotiate certain points of the law. The Ministry's full response to Radar's questions can be read here.
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