The Bottom Line
- Directors Are Personally Liable: The corporate veil offers no protection for compliance failures. The Amsterdam Court of Appeal held a director personally liable for his company’s breaches of anti-money laundering laws, confirming that passive negligence is enough to trigger criminal responsibility.
- Compliance is Non-Negotiable: Mandatory Customer Due Diligence (CDD) and the reporting of unusual transactions are strict, standalone duties. Relying on checks performed by other entities, such as banks or vehicle registration authorities, is not a valid defense.
- Record-Keeping Creates a Double Bind: If you conduct CDD, you must retain the records in an accessible manner for five years, creating a separate offense if you fail to do so. However, the court also highlighted a legal nuance: you cannot be convicted of failing to retain records you never created in the first place.
The Details
This case centered on the director of a car dealership whose company repeatedly accepted large cash payments for vehicles without adhering to the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft). The prosecution focused on two core failures: not performing mandatory Customer Due Diligence (CDD) on customers making cash payments over €15,000, and failing to report these “unusual transactions” (in this case, cash payments over €25,000) to the Netherlands’ Financial Intelligence Unit (FIU). The court dismissed the director’s defense that vehicle registration or bank transfer records were sufficient, reinforcing that the Wwft imposes an independent and proactive obligation on businesses to vet their clients and report suspicious activity.
The court’s decision is a stark reminder that accountability flows directly to the top. The director was convicted for “de facto management” (feitelijk leidinggeven) of the illegal conduct. Critically, the court affirmed that this does not require active instruction or direct involvement in the specific violations. As the person with ultimate responsibility for the company’s operations, the director had a duty to implement policies that ensured compliance. His failure to establish such a framework, thereby creating an environment where breaches were likely, was sufficient to establish personal criminal culpability. This sends a clear signal to CEOs and board members: ignorance or inaction is not a defense.
While the director was convicted on the main charges, the ruling also offers important lessons for legal counsel. Several charges were dismissed because the absolute 12-year statute of limitations had expired, a crucial detail in lengthy economic crime investigations. Furthermore, the court made a fine distinction regarding the record-keeping obligation. It acquitted the director on most charges of failing to retain records, reasoning that this duty only applies to client data that has actually been collected. Since the company had failed its primary duty to conduct CDD, it could not logically be found guilty of failing to retain the non-existent records. This highlights how precise legal drafting can create unexpected outcomes, even if it doesn’t prevent a conviction for the underlying compliance failures.
Source
Amsterdam Court of Appeal
