Netherlands’ Financial Supervision Office (BFT) is an independent supervisory authority for civil-law notaries, bailiffs and many other professional groups that come under the scrutiny of the Dutch AML/CFT law. The BFT has recently issued guidance for notaries about cryptocurrency and how they should investigate for AML/CFT violations in the sector.
Cryptocurrencies are a virtual means of payment, used for both legal and illegal transactions. They involve significant money laundering risks. Indeed, cryptocurrency is the most common mode of payment on the dark web and ransomware. It is also used for tax evasion and laundering funds of criminal origin. Cryptocurrencies that offer greater anonymity (privacycoins) to the sender pose an even higher risk of ML/TF.
To detect unusual cryptocurrency transactions, a civil-law notary must first check if the transactions occurred through registered crypto-service providers. Crypto-service providers in the Netherlands must register with the Dutch banking regulator – De Nederlandsche Bank (DNB) – even if they have a DNB license for other activities. DNB assesses the suitability and reliability of the directors of the crypto-service provider. Absence of DNB registration may mean that the provider is operating illegally. Note that DNB registration does not guarantee that there will not be an unusual transaction; it only reduces the ML/TF risk.
Since cryptocurrencies such as Bitcoin are not currently acceptable as legal tender in the Netherlands, the notary cannot accept the exchange value of the purchase price in bitcoins. If a buyer bypasses the notary and pays the seller directly, the notary must be wary of the ML/TF risk. On the basis of this different method of payment, the notary can deny service and/or report unusual transactions. The notary can also question the buyer as to why they chose cryptocurrency as their mode of payment. Importantly, the notary must also establish the source of the funds and confirm that the seller has received the amount.
Source: BFT, Netherlands