The Sanctions Act (officially known as “The Sanctions Act 1977”) is a framework law that provides the basis for the elaboration of national and international regulations implementing international sanctions measures. The purpose of this law is to create and ensure integrity and transparency, and to counter money laundering, terrorism and illicit trafficking.
To whom does the sanctions law apply?
The scope of the Sanctions Act is broad and includes several groups. First, all Dutch legal entities are covered by the law, which means that they are obliged to comply with the sanctions regulations. In addition, the law applies to anyone located in the Netherlands, regardless of their nationality. Finally, the law also applies to Dutch nationals outside the Netherlands, meaning they are obliged to comply with the sanctions regulations even if they are abroad.
Failure to comply with sanctions regulations under the Sanctions Act is considered an economic crime. Penalties can range from fines to imprisonment, depending on the severity of the offense. The maximum fine that can be imposed is €760,000 per offense, while the maximum prison sentence can be up to 6 years.
What is a Sanctions List?
The sanctions list is a publicly accessible list consisting of organizations and individuals subject to economic restrictions. Thus, doing business with companies or individuals on the list is prohibited. Examples of these financial sanctions are;
- Freezing assets;
- Restrictions on providing financial services or;
- A ban on making your assets available.
If a relation of your company is on the sanctions list, you will have to take immediate action. It depends on the provision of the sanctions list what steps need to be taken. For example, an insurance policy may have to be blocked or credit terminated. Then you will have to report the ‘hit’ to the DNB after which they will assess it. If the hit is complete, the report will be forwarded back to the Minister of Finance. He or she will confirm or reject the hit.
To whom does the sanctions law apply?
The sanctions law includes:
- All Dutch legal entities;
- Anyone located in the Netherlands and;
- All Dutch people outside the Netherlands.
If the persons in the above groups do not follow the sanctions regulations based on the Sanctions Act, they commit an economic crime. The penalty for this can extend to a fine of up to €760,000 per violation or imprisonment for up to 6 years.
Impact of the sanctions list
If a relationship of a company is on the sanctions list, it is necessary to take immediate action. The specific steps to be taken depend on the provisions of the sanctions regime. For example, it may be necessary to block an insurance policy or terminate credit. The “hit” must then be reported to DNB, which will assess the report. Once the report is complete, it is forwarded to the Minister of Finance, who will either confirm or reject the ‘hit’.
Conclusion
Compliance with the Sanctions Act and adherence to sanctions regulations is essential to ensure the integrity of financial institutions and enable the fight against money laundering, terrorism and illicit trafficking. Through strict supervision and enforcement, the Sanctions Act contributes to a safer and more transparent financial sector, both nationally and internationally. It is therefore of great importance that all relevant parties are aware of and comply with their obligations under this law to achieve its intended objectives.
Who are the supervisors?
To ensure compliance with sanctions regulations, regulators have been appointed. The Financial Markets Authority (AFM) and De Nederlandsche Bank (DNB) play a crucial role in monitoring compliance with the Sanctions Act. They are responsible for supervising financial institutions and have the authority to impose sanctions for non-compliance. In 1977, the Regulations for the Supervision of the Sanctions Act were drawn up, which set out specific guidelines for financial institutions regarding the monitoring of their relationships on the sanctions list.
