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The Dutch central bank (DNB) has said that the country’s payments and e-money industry is showing signs of improvement when it comes to compliance obligations.
There is a "growing awareness of integrity risks" among payments and e-money institutions, the DNB said in a supervisory focus report published on April 22. This is due to "the tone at the top" of companies, it said.
The DNB has also noted that an increasing number of institutions are including risks in the Systematic Integrity Risk Assessment (SIRA) that are appropriate in the context of the services that these institutions provide, making it easier for them to develop concrete mitigation measures.
With regard to customer due diligence, progress has also been made in documenting and tracking the outcomes of their screening processes.
"As a result, institutions are better able to establish risk and transaction profiles, which contribute to better ongoing monitoring of business relationships," said the DNB.
However, the DNB has pointed out weaknesses with customer due diligence as well. “We found that the risk profile assessment lacked sufficient depth,” the central bank said.
For example, customer files often lacked substantiation regarding how the supervised institution arrived at a customer’s risk profile, and many did not specify what factors were considered in the assessment.
The DNB also said that sanction screening compliance at crypto-asset service providers remained an issue.
All the institutions that were examined by the DNB conducted sanctions screening and had implemented the basic requirements, such as mandatory reporting and customer screening.
However, the DNB said that it had found that sanctions risks were not thoroughly analysed, and that the institutions did not have adequate frameworks for policies, procedures and measures to ensure compliance with sanctions regulations.
This means that frameworks that crypto companies have set up for compliance are lagging behind those which have been set up for AML compliance.
“To ensure adequate screening, it is essential that policies and procedures offer comprehensive and consistent guidelines on who should be screened and when,” the regulator said.
The DNB added that many institutions consider that the measures they take to comply with anti-money laundering (AML) laws also reduce the risk of sanctions violations.
However, specific aspects of service provision and customer information (such as nationality, residential address or metadata, such as IP addresses) may result in a different impact on the assessment of sanctions risks, the DNB said.
