Five large Dutch banks will soon be able to jointly examine all payments of more than 100 euros from their account holders. That is the intention of a proposal to amend the Money Laundering and Terrorist Financing Prevention Act.
Banks already monitor all transactions of their own account holders for suspicious patterns, but do not see what customers are doing at other banks. ING, Rabobank, ABN AMRO, De Volksbank and Triodos hope to increase the chance of illegal transactions being caught by sweeping together all transactions of more than 100 euros from private individuals and examining them for cross-connections. For example, large payments, which have been split into smaller transactions from various banks in order not to be noticed, still fall through the basket.
Since 2021, business payments have been combined and viewed by Transaction Monitoring Netherlands (TMNL), the company that the banks founded. The proposal should also allow this for transactions above 100 euros from private individuals.
The plan is not undisputed. A draft version was heavily criticized by the Council of State (RvS) and the Dutch Data Protection Authority (AP) for infringing on citizens’ privacy. It would even “open the way for unprecedented mass surveillance.”
According to a spokesman for the Ministry of Finance, these objections have been removed by extra guarantees in the bill that is now before the House. According to the Dutch Banking Association (NVB), the House of Representatives, which will discuss the proposal next year, has once again asked the AP and RvS for advice. The Consumers’ Association and internet privacy organization Bits of Freedom have not studied the plan in depth, and therefore have no opinion. In the new version, payment data goes anonymously to TMNL. So they cannot see which person is behind the transaction. If TMNL signals possible danger, it will notify the bank. He then links the customer to the transaction and can conduct further investigation or report this to the police.
The weak point of TMNL is that not all banks participate. The dragnet is easy to avoid by choosing banks that do not participate. According to a spokesman, regulator De Nederlandsche Bank cannot oblige banks to participate in TMNL.
However, the NVB expects more banks to join after the amendment to the law. “The law also allows banks to outsource detection of unusual transactions,” says a spokesperson. “That can be cheaper and more effective in the longer term.”
Van Lanschot Kempen says it is not yet participating because the bank is only active to a limited extent in business payments, which TMNL is now allowed to investigate. That may change after the amendment to the law.
“We support the approach of Transaction Monitoring Netherlands and closely monitor developments. We also have regular contact with them about this. In the coming year, we will explore the possibilities of participation together with TMNL.”
Online banks Knab and Revolut also say they are investigating possibilities for participation. Openbank points out that it is under Spanish supervision, the German N26 does not respond to questions.
Neobank Bunq does not intend to participate in TMNL, says founder and CEO Ali Niknam. “We were never asked to participate, as far as I know. We already use artificial intelligence to monitor transactions and are ahead of other banks’ systems. It remains to be seen whether a collaboration with TMNL would improve that,” says the CEO who recently won a lawsuit from De Nederlandsche Bank about the way in which Bunq monitors transactions.
Niknam wonders whether the investigation could not be done more effectively by the police. Despite the proposed privacy measures, an organization that monitors all payment traffic still worries him: “You are creating a powerful institution with this and you do not know how it will develop in the future.”