“Working together as one authority to combat financial crime and unethical behaviour in the financial sector.”
The Financial Expertise Centre (FEC) is a partnership between various authorities with supervisory, monitoring, prosecution or investigative tasks within the financial sector, which has been established to strengthen the integrity of this sector. The FEC does this by taking preventive and active measures against potential threats to this integrity. In addition, the FEC has an important task in the area of education and information provision. The exchange of insights, knowledge and skills of FEC partners and observers enables the FEC to act effectively and efficiently. A joint approach allows for problem-focused actions with a wide impact.
The FEC partnership aims to strengthen the integrity of the financial sector, thereby reducing illicit money flows in and through the Netherlands. The FEC aims to counter financial crime and other unethical behaviour in the financial sector.
The FEC’s mission is to strengthen the financial system by sharing and exchanging information, knowledge, and skills, in the first instance in the public-sector sphere and from there on also through public-private collaboration.
To enable this, the FEC has the following three core tasks:
- Structural exchange of information
- Sharing knowledge through our Knowledge Centre, and
- Joint implementation of programmes, projects and task forces.
At the organisational level, the FEC is composed of an FEC Council and an FEC unit. This was enshrined in the 2014 FEC Covenant. Other organisational structures, not mentioned in the Covenant, such as the FEC contacts, the FEC Privacy Platform and the FEC TF Analysis Team, play a crucial role within the FEC partnership.
FEC partners and observers
Within the FEC, the public authorities − referred to as partners − collaborate on the basis of their own powers (including statutory powers) and responsibilities insofar as these relate to the integrity of the financial sector. The FEC consists of the following seven partners:
- The Dutch Authority for the Financial Markets (AFM)
- The Tax and Customs Administration (Belastingdienst)
- De Nederlandsche Bank N.V. (DNB)
- The Financial Intelligence Unit − Netherlands (FIU-NL)
- The Fiscal Intelligence and Investigation Service (FIOD)
- The Public Prosecutor’s Office (OM)
- The National Police (NP)
The Ministry of Finance and the Ministry of Security and Justice are involved in the FEC as observers.
FEC Public-Private Partnership
Within the public-private partnership (PPS), in addition to the collaboration within the Serious Crime Task Force and the Terrorist Financing Task Force, the focus has been firmly on the development of knowledge of phenomena, with a view to substantially reducing criminal money flows. Thanks to the FEC partners and the large banks joining forces for the development of knowledge, money laundering phenomena can be identified using precise indicators.
The FEC collaborates with the following parties from the private sector:
- ABN Amro
- De Volksbank
- Rabobank, and
- NVB, as the representative of the banks
The FEC possesses an information platform where signals about potential integrity issues are exchanged constantly and information about malpractices by individuals or firms is shared. Within the FEC Public-Private Partnership (PPS), information is exchanged within task forces.
FEC Information platform
The information platform is composed of participants belonging to the seven FEC partner organisations. The aim of the platform is to reinforce each other’s information position and to undertake interventions together in order to strengthen the integrity of the financial sector. Exchange of information regarding subjects and phenomena takes place in response to the introduction of a signal, which could be a transfer of information or a request for information. These signals relate to all aspects of financial crime.
This approach requires the utmost care. Regarding the exchange of signals, our methods ensure that we remain within the existing legal frameworks. This is guaranteed by the 2014 FEC Covenant, which sets down strict agreements regarding the FEC cooperation, and by the 2019 Information Protocol, which contains agreements on the methods of sharing information used within the FEC. A key element of the collaboration is the principle that no action is taken without consultations, which entails that in all cases, information is only shared if this is allowed on the basis of the relevant partner’s options under the law.
Within the FEC, collaboration also takes place by means of task forces. In these task forces, the public partners provide private parties with targeted, limited information to enable them to identify relevant transactions and, if necessary, report these to the FIU-NL. These reports are essential for the public-sector parties to prevent and detect certain forms of crime. Task forces within the FEC include:
- The Serious Crime Task Force: to effectively provide and share information on key figures in serious organised and undermining crime to support banks in transaction monitoring;
- Terrorism Financing Task Force: to enable collaboration between public-sector and private-sector partners aimed at the prevention and criminal prosecution of terrorism financing.
* Terrorist Financing Task Force
Terrorist Financing Task Force: to enable collaboration between public-sector and private-sector partners aimed at the prevention and criminal prosecution of terrorist financing.
The Terrorist Financing Task Force (TFTF) was set up in 2017 with a view to achieving closer collaboration between public-sector and private-sector parties in order to combat terrorist financing more efficiently and effectively and thereby protecting the integrity of the financial sector. The Public Prosecution Service acts as the chair of this Task Force.
The TF Task Force was initially launched as a pilot, and was converted into a structural activity within the FEC PPP in 2019. In 2020, Triodos Bank N.V. was the fifth bank to join the TF Task Force.
There is considerable added value to public-sector and private-sector parties taking a joint approach to combating terrorist financing. The TFTF’s approach of sharing subject information between public-sector and private-sector parties within the existing statutory frameworks is a world first. The FATF has repeatedly stressed the importance of such public-private collaboration with respect to terrorist financing.=
* Serious Crime Task Force
In July 2019, the Serious Crime Task Force (SCTF) was launched, initially as a pilot. The SCTF is a partnership within the context of the FEC in which the Public Prosecution Service, the FIOD, the FIU-NL and the National Police are represented on the public-sector side and Rabobank, Volksbank, ING and ABN AMRO on the private-sector side. The task force focuses on targeting financial facilitators who offer their services to criminal organisations. The aim is to make a strong effort to combat undermining crime and to protect the integrity of the financial sector.
In mutual consultation, the private-sector parties and the FIU-NL analyse subjects (within the statutory frameworks) and modi operandi introduced by investigative authorities. This produces relevant reports of unusual transactions to the FIU-NL, which are then usually made available to the investigative authorities for use in criminal investigations. Using the knowledge gained, banks can strengthen their risk management and gatekeeping role and, in consultation with the Public Prosecution Service, take measures against unethical customers. Currently, this task force is fully operational and was made a permanent, structural part of the public-private partnership in the FEC context in mid-2021.
Knowledge sharing and the development of expertise are core tasks of the FEC. We implement these by fostering mutual relationships and collaboration between FEC partners and by facilitating the sharing and enhancement of insights, knowledge, and skills. This is done in our PPP projects, task forces, and our terrorist financing (TF) programme, as well as specific knowledge and expertise activities.
We undertake a specific knowledge and expertise activity in the area of data exchange and privacy through our FEC privacy platform. Here, FEC partners’ privacy experts exchange knowledge and expertise regarding data exchange (including the exchange of personal data). The aim is to jointly ensure that the exchange of information within the FEC context is executed carefully and within the existing statutory frameworks. At the same time, the aim is to ensure that the FEC partners can anticipate changes in legislation and regulations in good time.
Knowledge meetings (FECademies)
The FEC unit – occasionally in collaboration with the FIOD’s Trends4FI – organises meetings where knowledge is shared by the FEC partners. The meetings are mostly digital organised, for public-sector as well as private-sector (PPS) partners. The FEC also contributes to international knowledge sharing by sharing knowledge and giving presentations on the activities of the FEC network.
Within the FEC, the FEC partners jointly implement projects on a wide range of themes/phenomena aimed at achieving specific, actionable results. Many experts from the different FEC partners work together in various project groups as one authority. Public-Private Partnership (PPP) projects also make optimum use of banks’ experience.
Working together in projects strengthens the FEC’s effectiveness. The statutory frameworks within which it is allowed to operate are taken into account.
Here are some examples of projects that are being or have recently been carried out within the FEC:
- the long-term reduction of illegal trust services provided in and through the Netherlands;
- increasing the knowledge of FEC partners and market participants about the phenomenon of money laundering through Dutch investment firms and investment institutions by combining the knowledge available at the FEC partners in an exploratory analysis;
- providing a clear image of the impact of the increasing number of payment service providers (PSPs) within the payment system in order to create more knowledge and awareness about this and to provide responsible parties with more insight into the risks related to PSPs;
- increasing the knowledge that FEC partners and market participants have about the phenomenon of dividend stripping, by consolidating the knowledge available at the FEC partners into a knowledge document;
- ensuring that all crypto service providers that provide services in or from the Netherlands either are registered as required or discontinue their services;
- the Trade Based Money Laundering (TBML) automotive project, aimed at gaining insight into cash integration in the automotive sector and empowering market participants;
- combating the laundering of money obtained from trafficking in synthetic drugs and money flows that are directly or indirectly related to the purchase and production of such drugs;
- making the abuse of the foundation legal personality considerably more difficult by erecting various barriers, among other things keeping criminal money flows out of the financial system;
- improving the identification of corruption risks by banks and increasing and enhancing the reporting on this to the FIU-NL;
- preventing the laundering of criminal proceeds from labour exploitation and other forms of exploitation by ensuring that bank facilities can no longer be used in certain forms of exploitation.
Terrorist Financing programme
By means of the Terrorist Financing (TF) programme, the FEC partners aim to help counter terrorist financing. Among other things, this programme focuses on formulating typologies of potential kinds of terrorist financing.
This project identifies the financial networks of individuals known to the FEC partners and participants who can be connected to terrorism, as well as other relevant individuals and entities, on the basis of FEC signals. This provides insight into the manner in which and by whom they are financed. In all cases in which the insight obtained gives grounds to do so, an intervention strategy is drawn up. The knowledge obtained leads to the drawing up of tested typologies and the embedding of lessons learned at the partners involved.
The establishment of the FEC goes back to 1997. The decision to establish the FEC involved the then Ministers of Finance and of Justice, as well as the State Secretary of Finance.
1997: establishment of the FEC
The establishment of the FEC goes back to 1997. In December of that year, the Financial Sector Integrity Memorandum was issued. The decision to establish the FEC involved the then Ministers of Finance and of Justice, as well as the State Secretary of Finance.
The formation of a financial expertise centre was primarily motivated by two important factors:
- The great societal importance of an ethical financial sector
- The importance of sound supervision of administrative and criminal law enforcement in the financial sector
2004: structural change to the FEC
In the history of the FEC, 2004 was a significant year. In order to further increase the involvement of the FEC partners, and to enable them to assume their shared responsibility, the FEC’s structure was changed radically. The formation of the FEC Council was of particular significance in this.
In addition, the coordination and management support of the FEC were transferred from the Ministry of Finance to the Dutch Authority for the Financial Markets (AFM) in March 2004.
In 2007, the collaboration between the FEC partners was evaluated. The evaluation led the FEC Council’s to desire more efficient operational cooperation.
The subsequent reorganisation of the FEC took place in the second half of 2008. The ‘new FEC’ was launched officially on 1 January 2009. As of that date, the organisation was placed under the management of De Nederlandsche Bank (DNB).