Posted on by Juan Carlavilla

Netherlands and its definition of PEP

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Netherlands and its definition of PEP. Photo by Anna K.

Like all European Union member states, the Netherlands derives its regulations on the prevention of money laundering from initiatives developed within the EU. The main law governing this area is the Wet ter voorkoming van witwassen en financieren van terrorisme — the Anti-Money Laundering and Anti-Terrorism Financing Act —, enacted in 2008 and subject to various amendments over the years.

Regarding politically exposed persons, Dutch law defines this as a “natural person who holds or has held a significant public office as designated by a general order of the council.” In addition, as mandated by EU Directives, Dutch regulations also provide definitions for the terms: family member and close associate of a politically exposed person.

Family member of a politically exposed person: A natural person related to a politically exposed person, as established by general order of the council.

Close associate of a politically exposed person: A natural person belonging to a category of individuals to be designated by order of the council.

As can be seen from the analysis of the law, the list of positions that constitute politically exposed persons is delegated to future regulatory development by the Dutch government. This regulatory initiative is materialized in the Decree of July 17, 2018, which establishes the list of positions for politically exposed persons, among other things.

Regulatory Development

Regarding the list of positions determining the status of a politically exposed person, the Dutch Decree establishes that the following individuals hold politically significant roles:

  • Head of state, head of government, minister, deputy minister, or secretary of state;
  • Member of Parliament or member of a similar legislative body;
  • Member of the executive board of a political party;
  • Member of a supreme court, constitutional court, or other high-level judicial body whose rulings are not subject to appeal, except in exceptional cases;
  • Member of a court of auditors or a board of directors of a central bank;
  • Ambassador, chargé d’affaires, or high-ranking officer of the armed forces;
  • Member of the governing body, supervisory body, or management board of a state-owned enterprise;
  • Director, deputy director, or board member of an international organization.

This list is further supported by a document prepared by the Dutch government, which specifies which positions within the Dutch administration correspond to the categories outlined by the Decree.

This list, prepared by the government, complies with a mandate established in the Fifth Directive on the prevention of money laundering, which requires member states to compile an updated list of “important public functions” in each member state.

For example, for the category of “members of the executive board of a political party,” in the Netherlands, these will be “members of the board of a political party registered under Article G1 of the Electoral Law.” Similarly, for positions related to “high-ranking officers of the armed forces,” they include: Commander of the Armed Forces, Commander of the Naval Forces, Commander of the Army, Commander of the Air Force, and Commander of the Royal Netherlands Military Police.

On the other hand, the Decree stipulates that family members of politically exposed persons include:

  • The spouse or equivalent partner of a politically exposed person;
  • The child of a politically exposed person, as well as their spouse or equivalent partner;
  • The parents of a politically exposed person.

Finally, the regulation also states that close associates of politically exposed persons are:

  • A person known to be a joint owner of a legal entity or business with a politically exposed person, or who has close business relations with such a person;
  • A natural person who is the sole beneficial owner of a legal entity or arrangement created for the actual benefit of a politically exposed person.

Below are the main sources used by Pibisi to extract PEPs from the Netherlands:

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