bunq – a young online bank with app-based banking, which also calls itself ”the bank of The Free”, super-modern and befitting modern technology and time will become the world’s first bank with a fully public API in 2017 and launch across the European Union, Norway and Iceland in 2019. In private customer screening, bunq also uses modern technology, such as AI and data analytics.
AI testing is about test data: creating test data, being able to manipulate it, predicting good outcomes based on data.
However, the Dutch Central Bank (DNB) was of the opinion that bunq does not gather enough specific information about the customer using this method to properly assess money laundering risks.
As regulator, DNB has investigated the quality of SIRA (systematic integrity risk analysis) of financial institutions, including bunq. DNB found that bunq violates rules of the Decree on Prudential Rules Wft (Bpr) and The Prevention of Money Laundering and Terrorist Financing Act (Wwft) on essential points. DNB therefore issued a decree directing bunq to follow a line of conduct aimed at ending these breaches. bunq disagreed and went to court.
In the first instance, the Rotterdam District Court ruled in DNB’s favour. bunq stood its ground and appealed to the Trade and Industry Appeals Tribunal (CBb). CBb ruled otherwise on 18 October 2022. The CBB ruled that DNB did not prove that this method of screening violated the law. What is important here is that the law has open standards and does not prescribe exactly how banks and other institutions subject to the Wwft must screen their customers.
bunq has explained at length in the proceedings that and how its method, based on artificial intelligence, works and why it minimises the risk of money laundering. DNB did not sufficiently counter this, the CBB ruled. As a result, DNB also failed to prove that bunq is deficient in monitoring retail customers using their standard user profile.
There is talk of a revolutionary ruling – we would like to nuance this a bit here – by the way, without wanting to put a damper on the celebration.
Very nice that bunq pushed this case through – it takes courage to do that! It is not nothing for a fairly new company to take on the regulator DNB, and also to pursue the case to the highest court. However, what becomes clear once again is that the exact assessment of the subjective indicators that institutions face is unclear. This ruling unfortunately does not change that. A proper assessment of those subjective indicators under the Wwft remains tricky – and with banks understandably playing it safe, it means that companies in the “high risk industries” category are still finding it very difficult to get financing.
ACG International offers assistance
As an entrepreneur, you want your business to be and remain as profitable as possible. Corporate law is constantly evolving. A corporate lawyer not only guides and advises on concluding contracts and conducting proceedings, but is involved in strategic decision-making and in the day-to-day running of the company. This applies both when doing business in the Netherlands itself and when doing business internationally.
The specialists at ACG-International can help you with this. ACG International always has a tailor-made solution and tailors its support to your needs and per case: from a single experienced lawyer to a team of specialists. We help small and large entrepreneurs appropriately – matching the challenge, but also matching the budget.
Edith Nordmann, spoke at length about the Wwft at the Law 2.0 Conference Dubai.
Edith talked about restrictions faced by companies due to the strict guidelines and also made specific suggestions in this regard. Compliance with the Wwft is being checked more and more strictly by the Wwft regulators: De Nederlandse Bank (DNB), the Netherlands Authority for the Financial Markets (AFM), BFT and Belastingdienst Bureau Wwft. And that without notice. If companies fail to comply with their legal obligations, they risk a hefty fine, a penalty payment or even criminal prosecution.
If you want to learn more about Wwft you are at the right place.
Send an email to firstname.lastname@example.org or call us at +31 20 800 64 00 stating “Wwft assistance” and we shall make sure you receive answers to your questions.