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FIU-the Netherlands

Premises for crime

In the Netherlands, real estate is one of the sectors at risk when it comes to money laundering. There is, however, another reason why real estate merits our gatekeepers’ attention. After all, crime itself needs premises to thrive. Examples include cannabis cultivation, hard drug production, and human trafficking – whose victims need a place to stay.

Providing premises for crime occurs on a large scale. The report Criminele gebouwen (‘Criminal buildings), produced by the Dutch Ministry of Justice and Security’s Research and Documentation Centre (WODC), showed that approximately 50,000 properties in the Netherlands are being used for undermining criminal activities. The WODC estimates that about 80% of these properties, i.e., 40,000, are residential units. To put this in perspective: the mid-sized city of Zwolle has just under 60,000 residential units. 

There are different ways for criminals to obtain properties. Vulnerable people may be asked to make their house, or part of it, available for criminal use, or a property may be purchased specifically with such a goal in mind. In order to obtain a property, use must be made of several parties who are gatekeepers under the Money Laundering and Terrorist Financing (Prevention) Act (Wwft): valuers, estate agents, civil-law notaries, mortgage advisers (to the extent these are subject to the Wwft), and mortgage lenders.

Those gatekeepers can therefore play a crucial role in signalling problems in this area. Although this role may not always be easy, FIU Netherlands nevertheless receives reports on this subject that serve as the starting point for interesting financial analyses that are subsequently handed over to the investigative services. Ensuing investigations have shown, among other things, that frequent use is made of facilitators (who are not subject to the obligation to report) with knowledge and skills in the sector. These specialists know exactly what is required in terms of documentation, which makes malpractice difficult for gatekeepers to detect. Difficult, but not impossible. Because even though all the paperwork may seem in order, there may still be reasons for further investigation. Examples include falsified employment contracts, which may show up red flags in the form of high salaries that do not correspond to the position or work experience involved, employment contracts that are terminated as soon as the mortgage application has been accepted, and/or employment contracts entered into just before the mortgage application was made. Another pattern that emerges from the investigations is a tendency to ask few questions about a property and a preoccupation with concluding the purchase as quickly as possible. Another suspicious sign is a buyer who has no connection whatsoever with the region and also fails to offer a logical reason for buying the house.

This is of course not an exhaustive list, and methods for accommodating crime will continue to evolve. The essence of the above, however, is the principle of “know your customer”. You are therefore advised to ask questions, and to keep on asking if in doubt; consult open sources such as the Chamber of Commerce register; make home visits; ask for more than one salary slip; ask for a printout of someone’s employment history, via or a statement from the Employee Insurance Agency (UWV). In short: know who you do business with.