Both monitoring and sanction screening payment transactions by banks are activities that have a legal basis to carry out. The obligation to monitor transactions for unusualness is laid down in Article 2a of the Money Laundering and Terrorist Financing (Prevention) Act ('Wwft'). According to the Sanctions Act 1977 ('Sw') a supervised institution should adequately check whether the identity of a relationship with a (legal) person or entity to which sanctions apply is consistent.
Both activities are important activities especially as they have a high degree of complexity and the financial, legal and social stakes are high.2Article 3 (2) (d) Wwft. See also B. Snijder-Kuipers and L.C. van Slagmaat, 'Transaction monitoring in the Wwft', Tijdschrift Financieel Recht in de Praktijk, no. 7, December 2024, pp. 36-41. Millions of transactions are thus mandatorily monitored and screened for possible money laundering, terrorist financing and violation of sanction rules. In these operations, a group of bank clients feel discriminated against.
In this article, I elaborate on the fact that "estimating risk" is inherent to banking, but also necessary for transaction monitoring and sanction screening. After all, risk indicators are used to try to detect unusual transactions or hits with sanction lists. Based on recent case law, I show that while transaction monitoring and screening are allowed, and in some cases explicit regulatory stipulated so that banks can comply with prevailing laws and regulations, there are also ethical requirements to be met. The net result is oftentimes poor communication. The client does not find a sympathetic ear or adequate explanation about why additional questions are being asked or why transactions or funds are being blocked. I conclude this article with some reflections and recommendations to combat this undesirable situation.