Red Flags on Dutch Financial System, Report Warns Links to Corruption, Violence

– For Immediate Release –

Dutch Financial System Faces Risks for Money Laundering Linked to Corruption, Violence in Africa’s Great Lakes Region

• Advisory by The Sentry Red Flags Risk Factors for Illicit Financial Flows Stemming from Corruption, Mass Violence, and Predatory Enterprises
• Activities Involve Politically-Connected Figures in the Democratic Republic of Congo, and Possible Links to Companies and Businesspeople in the Netherlands

December 15, 2020  (Washington, D.C.) – Profiteers seeking to loot African countries and hide their ill-gotten gains abroad are utilizing holding companies in the Netherlands, warns a new advisory released today by The Sentry. Commissioned by the Dutch Ministry of Foreign Affairs, The Sentry’s advisory examines connections between corruption in Africa’s Great Lakes region—most notably in the Democratic Republic of Congo (DRC)—and the financial system of the Netherlands.

The Sentry identifies in its report dozens of connections between Dutch nationals and companies and high-level, politically connected figures in the DRC and Great Lakes region, as well as numerous risk factors for money laundering and corruption.

Megha Swamy, the Deputy Director of Illicit Finance Policy at The Sentry, said: “The Dutch tax and investment structure allows legitimate international business to thrive.  Nefarious individuals and networks looking to loot African countries, enterprises potentially linked to violence and human rights abuses, can also exploit these same structural advantages. Preventing abuse of the system by predatory enterprises is paramount to maintaining the integrity of the Dutch financial sector.”

Michelle Kendler-Kretsch, an Investigator at The Sentry, said: “The Dutch financial sector faces several points of exposure to risks of corruption and money laundering coming from Africa’s Great Lakes Region. Dutch authorities should urgently investigate and publicly highlight these threats to the nation’s financial and business sector, and encourage intelligence sharing with private sector partners. Dutch banks and other financial institutions doing business in the Netherlands need to be on high alert for suspicious transactions to and from the Great Lakes region, and ensure they take appropriate action, such as closing accounts, as warranted.”

The advisory spotlights five case studies that demonstrate possible ties between corporate entities in the Netherlands and corruption in the DRC. Two case studies focus on the corporate holdings of foreign nationals who are members of a high-level Congolese public official’s inner circle and who have extensive business networks across Europe and the Middle East. The other three case studies focus on major international companies that operate in the DRC and have large corporate structures in the Netherlands.

In tracing the links of global operations tainted by corruption allegations, The Sentry’s investigations found connections between holding companies and their beneficial owners from the Netherlands to the Great Lakes region, and including Panama, the Marshall Islands, Malta, the Bahamas, the British Virgin Islands, the Cayman Islands, and Gibraltar. The obfuscation techniques exhibited in the advisory’s case studies involve multiple layers of companies established in different jurisdictions.

Key recommendations

The Sentry advisory urges a range of critical actions to identify, disrupt, and prevent abuse of the Dutch financial and corporate system by corrupt actors and politically-exposed persons (PEPs).

For Dutch banks:

• Dutch banks holding accounts for Dutch-based companies of multinationals operating in the DRC should carry out enhanced monitoring on transactions going to or coming from the DRC.
• Dutch Banks should conduct Enhanced Due Diligence (EDD) to identify PEPs in the ownership structure, including within companies beneficially owned by a Dutch company or by the company’s ultimate beneficial owners overseas, and be prepared to take appropriate action, such as filing reports with law enforcement and closing accounts if warranted.
• Dutch banks should ensure that they understand the end-to-end ownership structure of complex, multi-layered corporate structures, particularly those operating subsidiaries in the DRC, applying EDD measures as appropriate. When risks are identified, banks should be prepared to take action, including closing accounts, filing suspicious activity reports, or other measures to protect the international financial system from corrupt actors.

For the Dutch government:

• Convene banks, extractives companies, and other stakeholders with government officials to discuss possible steps to prevent illicit financial flows and proceeds of corruption from the Great Lakes Region from contaminating the Dutch financial system.
• Issue a first-ever public anti-money laundering advisory to financial institutions, corporations, real estate agents, lawyers, accountants, and regulators on corruption risks in the extractive industries, particularly as relates to the DRC.
• Engage, via the Ministry of Foreign Affairs and the Ministry of Finance, with Congolese government partners and Congolese banks to share this report’s findings and to find methods of collaboration to address any concerns and provide training, technical assistance, and intelligence sharing.
• The Dutch Financial Intelligence Unit, Ministry of Finance, and law enforcement authorities should investigate entities tied to PEPs or to other entities placed under Global Magnitsky sanctions. It should also consider sharing information about Netherlands-based corporations that are under investigation in other jurisdictions with the appropriate jurisdictions.
• The Ministry of Finance should instruct Dutch parent companies to conduct enhanced due diligence on their subsidiaries, particularly in the DRC, and report any findings to law enforcement.
• Any accounts found to be held by PEPs should be handled according to guidance by the Financial Action Task Force (FATF).
• The government should consider requiring that foundations and charities operating in the Great Lakes carry out risk assessments to understand bribery and corruption risks and identify on a public register the names of their local partners (or even carry out due diligence).
• Advocate, via the Dutch Ministry of Foreign Affairs, for the inclusion of corruption as a criterion for sanctions designation as part of the US Global Magnitsky-style legislation currently being considered by the European Union.

Read the advisory: https://thesentry.org/reports/corruption-great-lakes-region/

For media inquiries or interview requests, please contact: Greg Hittelman, Director of Communications, +1 310 717 0606, [email protected]

ABOUT THE SENTRY

The Sentry is an investigative and policy team that follows the dirty money connected to African war criminals and transnational war profiteers and seeks to shut those benefiting from violence out of the international financial system. By disrupting the cost-benefit calculations of those who hijack governments for self-enrichment in East and Central Africa, the deadliest war zone globally since World War II, we seek to counter the main drivers of conflict and create new leverage for peace, human rights, and good governance. The Sentry is composed of financial investigators, international human rights lawyers, and regional experts, as well as former law enforcement agents, intelligence officers, policymakers, investigative journalists, and banking professionals. Co-founded by George Clooney and John Prendergast, The Sentry is a strategic partner of the Clooney Foundation for Justice.

Learn more at www.TheSentry.org.