07 December 2022

NVB: Undesirable consequences of de-risking for customers and banks

Safeguarding the integrity of the financial system is of major social importance. In recent
years, there has been increasing public and political attention to the prevention and
combating of financial crime in the Netherlands and abroad. Money laundering and
terrorist financing have great social impact, which undermine the rule of law and damage
the economy.

Banks are the gatekeepers of our financial system. In this role, banks want to contribute
to an effective response to this type of crime, by preventing abuse of the financial system.
It is important here that the legal options for a risk-based approach are utilized in practice.
Bank customers with a business bank account can thus rely on an appropriate service,
based on controlled and predictable processes for risk assessment and risk management.
This can preserve the balance between two key pillars of the financial system: financial
integrity and financial inclusion.

This balance is not maintained in all cases. This is a consequence of the current approach
to compliance with the Dutch Money Laundering and Terrorist Financing (Prevention) Act
(Wet ter voorkoming van witwassen en financieren van terrorisme, or Wwft). Based on
intrinsic motivation – but also due to increased supervisory and regulatory pressure and
increasing public expectations – banks are taking more stringent measures to further
reduce potential integrity risk. This is known as ‘de-risking’ [1].

De-risking can have negative economic and social consequences, as among other things
has become apparent through ongoing media coverage and discussions in parliament. It
is the corporate clients of banks that are experiencing the most adverse impact. Limited
differentiation of risk in the implementation of the Wwft is leading to increasing
administrative costs for customers, and also to limitations, or reduced access, to financial
services.

The NVB has been calling for attention to problems in the provision of services to customers
in the performance of this role for some time. A recent report from De Nederlandsche
Bank (DNB) devotes specific attention to this issue: ‘Van herstel naar balans. Een vooruitblik
naar een meer risicogebaseerde aanpak van het voorkomen en bestrijden van witwassen
en terrorismefinanciering’.

NVB

© NVB