2. LEGAL SYSTEM AND RELATED INSTITUTIONAL MEASURES
2.7 Cross-Border Declaration or Disclosure (SR.IX) 75 .1 Description and Analysis .1 Description and Analysis
Legal Framework:
Mechanisms to Monitor Cross-border Physical Transportation of Currency (c. IX.1):
571. As a member of the EU, the Netherlands applies EC and domestic rules in the case of cross border transportation of currency and negotiable instruments. The EC regulation 1889/2005 “on controls of cash entering or leaving the community”, which is directly applicable in the Netherlands as an EU member, establishes the rule of obligatory declaration for “cash” of EUR10 000 or more carried by any natural person entering or leaving the European Community. Article 2 of the Regulation defines cash as including currency and bearer negotiable instruments that are either in bearer form, endorsed without
75 This assessment was conducted on the basis of the requirements in place at the borders into and out of the Netherlands. FATF agreed in February 2009 that a supra-national approach could be applied for EU countries.
However, the supra-national approach has not been used to rate this assessment at the request of the authorities and also because further discussions are needed about how to implement a supra-national assessment.
restriction, made out to a fictitious payee, or otherwise in such a form that title thereto passes on delivery, as well as incomplete instruments (such as promissory notes and money orders) signed but with the payee’s name omitted. Throughout the analysis of this Recommendation the term “cash” will be used to include both currency and bearer negotiable instruments.
572. The EC regulation is complemented by the Dutch General Customs Code (Algemene Douanewet, hereinafter ADW). Article 3 (2) of the ADW requires that the declaration be made in writing on entering or leaving the EU territory. Among the things that must be declared are the name of the person (including the case of a company and the “intended recipient” if the traveler is carrying cash on behalf of a third person) and the intended use of the cash and its origin.
573. There are no declaration requirements, in the EC regulation or in the ADW, in the case of shipment of currency through containerized cargo or in the case of mailing of currency or bearer negotiable instruments by a natural or legal person.
574. Authorities stated that crew and travelers on vessels can declare cash through a shipping agent (shipbroker). The shipping agent can make a declaration himself when, under the captain’s orders, he takes cash on board or takes cash off the ship. In such cases Customs perform a broad inspection
575. Prior to the introduction of the EC regulation, there were no declaration requirements in the sense envisaged by SRIX; in July 2007 the Dutch authorities started to work in order to implement the EC Regulation. The authorities explained that prior to 2005 Customs could have (and still can) used powers stemming from the General Tax Code (Algemene wet inzake rijksbelastingen, hereinafter AWR) in the case of levy-related taxes for doing searches: if cash was discovered “cash notifications” were made to the FIOD. It is not clear how the powers envisaged by the AWR could be (can be) used in a situation in which there is no levy, such as the case of cross-border transportation of cash.
Request Information on Origin and Use of Currency (c. IX.2):
576. Customs have the authority to perform controls pursuant to the ADW (or, if they suspect tax-related offences, also pursuant to the AWR), which, in the case of the declaration requirement, consist at a minimum of checking the traveler’s identity. The traveler subjected to the declaration obligation has also the obligation to provide proof of identification on demand (Article 1.34 of the ADW). Upon the discovery of a false declaration or in the case of failure to declare Customs authorities undertake so-called
“in-depth” controls, in which the Customs official is entitled to ask for additional information, including with regard to the origin of the cash and its intended use. These data, as mentioned above, must be indicated in the declaration form. In this case Customs use a special standardized procedure with the aim to establish whether the information provided is correct and if there is any suspicion of ML.
Restraint of Currency (c. IX.3):
577. In the case of a lack of declaration or false declaration, Customs officials are authorized to detain the cash (Article 4.2. EC Regulation 1889/2005 in combination with Article 3:3 (1) (2) ADW), but only as long as the person subjected to the declaration requirement does not provide the information required for the declaration (Article 3:3 (3) ADW). Although this may not provide, per se, enough time to ascertain evidence of ML or TF, the authorities stated that this goal is achieved by means of the “in-depth control”
that is always applied in cases of lack/incomplete/incorrect declaration. The in-depth control, as explained by the authorities, consists of checking the cash, inspecting the luggage and making a copy of the identity documents and other relevant documents. Customs authorities are also entitled to conduct a body search, pursuant to Article 1:28 ADW
578. The situation is more complex if there are suspicions of ML or TF. Authorities stated that Customs have been empowered by the Besluit buitengewoon opsporingsambtenaar Belastingdienst/Douane (hereinafter referred to as ‘BOA decision’) to use investigative powers for a list of designated crimes, which includes ML but not TF (since TF is not an autonomous offence in the Netherlands). From discussions during the onsite mission it was clarified that a situation of suspicion of ML would not per se trigger the application of these powers, unless Customs suspects tax-related offences.
However, in the case in which the traveler complies with the declaration requirements and there is a suspicion of ML, the case would be transferred to FIOD as the competent law enforcement authority, but only a seizure pursuant to the Criminal Procedure Code (see discussion under Recommendation 3) could be applicable. In the period 1/1/2010-6/30/2010 there were 11 cases of suspicions of ML.
Retention of Information of Currency and Identification Data by Authorities when appropriate (c. IX.4); Access to Information by FIU (c. IX.5):
579. The declaration forms contain a series of data that must be filled in, which include, inter alia, the amount of the cash and the identification data of the bearer. At the end of each working day all declaration forms are sent to the Tax and Customs Administration/Central Administration (Belastingdienst/Centrale Administratie, hereinafter B/CA). B/CA enters the hand-written information on declaration forms into an automated system and processes them using a classification system for the information contained in/related to the declaration. This classification is based on various codes (for example these codes indicate whether the declaration was false/incomplete/missing; if the case has been forwarded to FIOD). The retention period of the processed data is of period of two years. The retention period for declarations is five years, except in the cases of incomplete/false/missing declarations, in which case the retention period is seven years. Pursuant to a memorandum of understanding signed in 2007 between the FIU and the Customs, the information contained in the declarations is also sent on a weekly basis to the FIU. However, in February 2010, the provision of this information had been discontinued until August 2010, as the Customs were upgrading their database. The information flow has resumed. The FIU also noted that, at times, the quality of data is poor and inaccurate and often not fully reliable (because the information is manually entered from hand-written declaration forms into the Customs system, hence the occurrence of errors).
Authorities stated that as a result of a meeting called specifically to address this issue, FIU-Netherlands and Customs have agreed to improve the quality of the declaration forms/reports in order to improve the analysis of the data and the reporting of suspicions of ML.
Domestic Cooperation between Customs, Immigration, and Related Authorities (c. IX.6):
580. The Customs cooperate with the FIU by virtue of an agreement which entered into effect in July 2007. The agreement stipulates the way the declaration data should be provided to the FIU and envisages an annual assessment of the process. Since the agreement was signed this assessment took place once, and revealed the issues noted under criterion IX.5 regarding the quality/reliability of the data.
Customs cooperate also with the Border Police (with whom they can request in real time information about travelers identities, including for suspect lists, suspected terrorists and sanction lists) and with the FIOD, which can be called in the case in which there are suspicions of ML. Although cooperation with the FIU is good, Customs indicated that they would like to receive a more “substantive” feedback from the FIU, other than the communication that an UTR has been developed into an STR, including more information on ML trends and typologies.
International Cooperation between Competent Authorities relating to Cross-border Physical Transportation of Currency (c. IX.7):
581. Articles 6 and 7 of EC Regulation No. 1889/2005 allow for the exchange of information with other EU Member States and non-EU Member States. Article 6 applies to the exchange of information
between EU Member States and allows for the transmission of information gathered through the declaration or disclosure process when there are indications that the sums of cash are related to any illegal activities associated with the movement of cash. As a member of the EU, the Netherlands also apply EC Regulation 515/97 on mutual assistance in customs matters. Article 7 (above) further provides for the exchange of information with non-EU Member States upon certain conditions.
582. At EU level there are also several mechanisms for exchanging of information that can be used also for the purpose of detecting money launderers or terrorist financiers and cash couriers, such as FIDE (Customs Files Identification Database), which can be used to check whether a person or company is or has been subject to criminal investigation or subjected to criminal sanctions; CIF (Customs Information System), which include also information on cash detained/seized; and the Risk Information Form (RIF) a system whereby customs administrations can exchange concrete risk information in a standardized format.
These risks can relate to different fields of customs supervision, e.g. import of goods, transit of goods but also aspects related to cash controls. On the basis of these information customs administrations can decide to target these aspects and perform further controls.
583. Although the Netherlands have signed several Agreements on customs cooperation and mutual assistance with non-EU States, many of these agreements were established at a time in which there was no declaration obligation for cross border transportation of cash and, therefore, they would not set forth specific arrangements for the sharing of information recorded pursuant to criterion IX.4
Sanctions for Making False Declarations/Disclosures (applying c. 17.1-17.4 in R.17, c. IX.8; Sanctions for Cross-border Physical Transportation of Currency for Purposes of ML or TF (applying c. 17.1-17.4 in R.17, c. IX.9):
584. Article 10:5 of the ADW provides that those who make an incorrect or incomplete declaration or are obliged, by virtue of Customs legislation, to provide information details or indication and fail to provide it, or provide it incorrectly or incompletely are subjected to detention not exceeding 6 months or a fine of third category. The sanctions are differentiated taking into account whether the violation was done with intent or gross negligence; the amount of the sum; and the type of violation (failure to declare;
incorrect or incomplete declaration), and range between a minimum of EUR250 to a maximum of 10 percent of the amount not declared, in any case the fine cannot exceed EUR19 000. Authorities explained that the case of recidivism would trigger a suspicion of ML by default. Authorities provided statistics for sanctions issued for the period January (when the database was established)–May 2010 as follows: there were 157 cases (the overall amount of the currency involved was EUR2 494 650) of non-declaration and 2 cases of incomplete/incorrect declarations (currency involved: EUR94 700). The average amount of the fines issued is between EUR1 000 and EUR2 000. The authorities stated that the maximum fine imposed in a case of non-declaration was EUR5 235.
585. There are no additional sanctions other than those provided for in the Penal Code for money laundering (terrorist financing is not an autonomous offence in the Netherlands but in some situations could be considered as “preparation” of a terrorist act or “participation in a terrorist organization” and, under the terms discussed under SRII it could be theoretically possible that a cross border transportation of cash be considered as a “preparation” for a terrorist act or “participation in a terrorist organization”).
586. Sanctions appear to be proportionate and dissuasive. From a sample of issued sanctions provided by the authorities (see table below) it appears that in several instances sanctions are too low compared to the non declared amounts, hence, issues of effectiveness.
Reference
Amount of currency involved
(converted to EUR ) Imposed fine
52000310001 EUR 28 410 EUR 250
Reference
Amount of currency involved
(converted to EUR ) Imposed fine
52000110022 EUR 29 420 EUR 1 000
52000410017 EUR 13 000 EUR 500
52000110026 EUR 11 485 EUR 1 000
52000310108 EUR 12 535 EUR 1 000
52000310109 EUR 26 889 EUR 1 000
52000110029 EUR 11 180 EUR 1 000
52000710034 EUR 10 928 EUR 500
52000410034 EUR 39 574 EUR 2 000
52000410032 EUR 11 240 EUR 500
52000410029 EUR 21 569 EUR 2 000
52000210047 EUR 19 640 EUR 2 000
52000410043 EUR 12 500 EUR 1 000
52000410042 EUR 10 000 EUR 500
52000410041 EUR 16 070 EUR 1 000
52000710036 EUR 11 550 EUR 250
52000510046 EUR 11 950 EUR 500
52000410050 EUR 10 000 EUR 1 000
52000210121 EUR 19 000 EUR 1 000
52000410053 EUR 11 020 EUR 1 000
52000110040 EUR 10 115 EUR 1 000
52000710039 EUR 31 327 EUR 2 000
52000510050 EUR 14 294 EUR 1 000
52000410059 EUR 18 774 EUR 1 000
52000410064 EUR 15 314 EUR 1 000
52000110046 EUR 35 030 EUR 2 000
52000410076 EUR 10 928 EUR 1 000
52000110048 EUR 44 000 EUR 2 000
52000110047 EUR 14 000 EUR 1 000
52000510103 EUR 29 514 EUR 250
52000310165 EUR 28 150 EUR 500
52000110056 EUR 15 725 EUR 1 000
52000510059 EUR 12 423 EUR 250
52000810037 EUR 15 000 EUR 1 000
52000210074 EUR 20 000 EUR 2 000
52000210075 EUR 21 280 EUR 2 000
52000310198 EUR 35 000 EUR 2 000
52000810043 EUR 100 000 EUR 1 000
52000810040 EUR 30 000 EUR 2 000
52000510074 EUR 10 587 EUR 1 000
52000310122 EUR 52 320 EUR 5 232
52000410090 EUR 22 359, EUR 2 000
52000310143 EUR 12 486 EUR 1 000
Confiscation of Currency Related to ML/TF (applying c. 3.1-3.6 in R.3, c. IX.10; Confiscation of Currency Pursuant to UN SCRs (applying c. III.1-III.10 in SR III, c. IX.11):
587. Provisional measures and confiscation (as described under R.3) can be applied also in the case of cross border transportation of cash that are related to ML. For the applicability of confiscation in the case of FT, in the absence of an autonomous offence of FT, seizure and confiscation could be theoretically possible if the cash were considered within the “preparation” of a terrorist act or “participation in a terrorist organization” offenses. Authorities provided statistics on the number of cases which were transferred to FIOD for seizure for the period January–May 2010.
588. Funds and assets of persons and entities that are used for TF are frozen according to EC Regulation No. 881/2002 of May 27, 2002 and EC Regulation No. 2580/2001 of December 27, 2001 and, with regard to EU-internals, according to domestic designations pursuant to the Sanctions Act. Customs indicated that, through the border Police they would have access to suspect lists (that includes suspect for terrorism). In the case of EU/UN designated persons, the Customs Manual indicates the procedure to follow in the case in which a person’s name matches with the lists.
Notification of Foreign Agency of Unusual Movement of Precious Metal and Stones (c. IX.12):
589. Within the EC, the reporting of cash and other means covers precious metals and stones. That is not the case for controls at the EC external frontiers. However, a customs declaration is required in any event when these goods are imported even if their value does not exceed the threshold value. In these cases information is exchanged with other countries under conditions set out in IX.7.
Safeguards for Proper Use of Information (c. IX.13):
590. Authorities stated that the system for reporting cross border transactions is subject to national security provisions which apply to the entire Tax and Customs Administration (Voorschift Beveiliging).
The national security policy provides for physical protection of the terminals in use (locked rooms, restricted access to premises) and the restriction on personal access. Only designated officers have access to the systems (via authorizations by system owner). The sharing of information is restricted: the AWR and the ADW provide in what cases information can be shared with (governmental) third parties. The data which is collected is considered ‘entry data’; when the data is processed it is considered as “personal” or
“Police” data (in the latter case, for example, when the data is processed with investigative information) and subject to the rules on personal and Police data.
Training, Data Collection, Enforcement and Targeting Programs (c. IX.14):
591. Customs authorities receive regular training regarding the implementation of the declaration-related requirements, inspection procedures and targeting cash couriers. Dedicated training sessions on cash couriers have been held for the customs officers working at Schiphol airport and other airports in the Netherlands. The customs officials monitoring cross-border cash movements are provided with the knowledge and information they require to complete their tasks. They are also regularly provided with practical cash information updates, which contain case-specific information e.g., about possible methods of concealment. For all Customs Authorities officers an electronic learning environment has been developed, including several hours of practice.
Additional Element—Implementation of SR.IX Best Practices (c. IX.16):
592. The Netherlands apply a EUR10 000 threshold for reporting of cross-border movement of currency and bearer negotiable instruments. To detect potential false declarations or disclosures and possible ML, the competent officers carry out controls, also in the form of “in-depth controls”, described
earlier on. The controls are performed either randomly or on a targeted risk-based approach. Authorities stated that the data collected is also processed with a view to develop risk profiles and operational intelligence, which is shared with the local Customs offices. As mentioned under criterion IX14, the customs officials monitoring cross-border cash movements are provided with the knowledge and information they require in order to complete their tasks. There are three specially-trained cash detection dogs.
Additional Element—Computerization of Database and Accessible to Competent Authorities (c. IX.17):
593. Customs authorities maintain a computerized database. See analysis under criteria IX.4 and IX.5.
The database is not accessible to the FIU, which only receives the raw data of the declarations on a weekly basis.
Statistics (R.32)
594. Only since a more sophisticated database was established in January 2010 are Customs authorities maintaining more comprehensive statistics that, in addition to overall value of cross border cash movement to/from the Netherlands (provided for 2007, 2008 and 2009, see first table below), would also include a breakdown per port of entry (with the indication of various codes for the results of the in depth controls, see second table below).
Cross-border cash movement (1889/2005-reports) in year 2007 (since June 15th 2007)
Type of Report Number Amount Average amount
cash to the Netherlands 595 EUR 22 990 000 EUR 39 000
cash from the Netherlands 175 EUR 5 463 000 EUR 32 000
Total 770 EUR 28 453 000 EUR 37 000
Cross-border cash movement (1889/2005-reports) in year 2008
Type of Report Number Amount Average amount
cash to the Netherlands 1 148 EUR 59 385 000 EUR 52 000
cash from the Netherlands 659 EUR 18 538 000 EUR 28 000
Total 1 807 EUR 77 923 000 EUR 43 000
Cross-border cash movement (1889/2005-reports) in year 2009
Type of Report Number Amount Average amount
import cash to the Netherlands 824 EUR 49 106 000 EUR 60 000
export cash from the Netherlands 23 EUR 25 379 000 EUR 28 000
transit of cash through the Netherlands 891 EUR 41 196 000 EUR 46 000
Cash declarations–January 1, 2010 to May 19, 2010
Number of declarations Value1 Entry Outgoing
1103* EUR 51 897.202 EUR 40 554 537 EUR 11 342 663
Code 12 28 10
Code 2 74 83
Code 3 2 0
Code 4 0 1
Code 5 2 7
Schiphol (airport) 970 682 288
Maasvlakte (harbour) 97 26 71
Amsterdam (harbour) 26 26
Vlissingen (harbour) 3 3
Eindhoven (airport) 6 6
Moerdijk (harbour) 1 1
Total 1 103 708 395
* There were no declarations of other negotiable instruments, only cash declarations.
1 Authorities indicated that this figures include also the amount seized, but could not provide more detailed information.
2 Code 1: in depth control / no irregularities Code 2: in depth control / no declaration
Code 3: in depth control / false or incomplete declaration Code 4: detention of cash
Code 5: suspicion of money laundering
Adequacy of Resources—Customs (R.30)
595. Customs authorities appear to be adequately resourced.
596. The Customs Administration is part of the Tax and Customs Administration of the Ministry of Finance. The Director-general for the Tax and Customs Administration (DG Belastingdienst) leads this service. It is placed as one of the Directorates at the Ministry of Finance besides the Directorate for Fiscal
596. The Customs Administration is part of the Tax and Customs Administration of the Ministry of Finance. The Director-general for the Tax and Customs Administration (DG Belastingdienst) leads this service. It is placed as one of the Directorates at the Ministry of Finance besides the Directorate for Fiscal