Banks in the Netherlands are making some progress when it comes to KYC processes by bridging regulatory expectations and client cooperation challenges.
«The panic surrounding Know Your Customer (KYC) is subsiding,» says Tom Loonen, training director of the new Certified KYC Analyst course at Vrije Universiteit Amsterdam. Dutch banks are advancing in their processes under the Money Laundering and Terrorist Financing Act (Wwft), moving towards a more risk-based approach. However, banks continue to face resistance from their clients.
Loonen identifies significant room for improvement in KYC processes, particularly in how banks engage with their clients. «Banks need to start viewing the client as a partner,» he asserts. The course, which began in September at the VU, attracted 27 students, mostly from financial institutions.
Client screening by financial institutions is a legal requirement to ensure compliance with the Wwft. This has evolved into a significant industry. The four largest Dutch banks spent 1.1 billion euros in 2021 to combat fraud, money laundering, and terrorist financing, comprising eight percent of their total charges.
The sector also supports more than ten thousand jobs. A recent KPMG survey cited an anonymous bank executive: «At our bank, more people work on compliance tasks daily to stop money laundering and terrorist financing than the number of police officers on the streets in the Netherlands.»
Certified KYC Analyst course
Despite extensive efforts, the three major Dutch banks still have around a thousand vacancies for client due diligence staff. Given the high demand for qualified professionals, the Netherlands boasts a large supply of KYC and CDD training. The Certified KYC Analyst course at VU University Amsterdam is considered top-tier. This one-year program is designed for experienced KYC analysts at financial institutions, aiming to broaden their understanding of the ecosystem combating fraud, money laundering, and terrorist financing.
Course lecturers come from prestigious organizations including the Financial Action Task Force, the Financial Intelligence Unit (FIU), Transaction Monitoring Netherlands (TMN), the Public Prosecutor’s Office, and regulators DNB and AFM.
In addition to being a training director, Loonen is a professor of financial law & integrity at VU University, special counsel at Pinsent Masons Netherlands, and holds various other esteemed positions. His background includes serving on the board of private bank InsingerGilissen, focusing on risk, compliance, and money laundering.
Loonen’s personal experience with KYC as a consumer adds to his insights. After submitting part of his income tax return to his bank for KYC purposes and receiving no response, he was warned his banking relationship might be terminated. «Such experiences contribute to customers› dislike of these enquiries,» Loonen explains.
Taking KYC seriously
Loonen believes the role of a KYC analyst should be taken seriously. «KYC is often seen as a tick-box exercise, but its true purpose is to ensure banks know their customers well,» he says. Recent fines and settlements show Dutch banks› struggle with Wwft requirements, but Loonen is optimistic about their progress.
He suggests that banks, increasingly distant due to online services, find KYC analysts often being the few who still interact with customers.
Loonen advocates for a partnership approach in combating money laundering and terrorist financing. «Why not reward clients with higher savings rates or lower banking charges for active KYC cooperation?» he proposes. He believes in informing clients about the importance of Wwft compliance and rewarding their active participation.
Technology could support this shift, with digital client checks using algorithms, machine learning, and artificial intelligence handling simpler compliance aspects. «Our KYC expert course at the VU focuses on enhancing the expert role in dealing with complex cases,» concludes Loonen.