Fine for trust office CIS Management for insufficient customer due diligence

Non-compliance

Trust offices may not enter into a business relationship or provide a trust service until customer due diligence has been carried out that meets the legal requirements as set out in the Act on the Supervision of Trust Offices 2018 (Wet toezicht trustkantoren 2018 – Wtt 2018)

Upon examination of four customer files, DNB determined that in three high-risk customer files the customer due diligence carried out by CIS did not meet the requirements of the Wtt 2018. As a result, there are doubts about the accuracy or completeness of the customer due diligence, even though CIS did provide trust services to the parties in the customer files examined. This is in non-compliance with the law. DNB considers CIS to be particularly culpable in this instance of non-compliance as a similar instance of non-compliance had previously been identified within CIS.

A trust office must also determine on the basis of the outcome of its customer due diligence whether integrity risks are related to the trust services provided. If that is the case, the trust office must ascertain that the integrity risks have been adequately mitigated. DNB has established that CIS failed to do so in one customer file that was examined. The fine also relates to that violation.

DNB has imposed a fine on CIS for this non-compliance, which is subject to a basic fine amount of €2,500,000 per breach. DNB is of the opinion that the inadequate customer due diligence in one customer file has caused the circumstance that CIS has not ascertained that the integrity risks in respect of the service to the same client have been mitigated. DNB therefore imposed a single fine. With a presumption of the size of CIS, DNB has set the amount of the fine to € 156.250.

Gatekeepers

The Wtt 2018 aims to promote the integrity of the financial system through regulation of the trust sector. Trust offices act as gatekeepers of the system. By conducting ongoing customer due diligence, including prior to entering into a business relationship, trust offices play an important role in countering terrorist financing and criminal money laundering. CIS failed to fulfil its obligation to conduct proper customer due diligence, thus compromising the objectives of the Wtt 2018.

Further information

The full text of the Decision can be found here. For more information, please contact DNB's Information Desk on 0800 020 1068 (freephone in the Netherlands) or +31 20 524 9111 (if you call us from abroad).