What is compliance?
The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 with headquarters in Paris, France.
The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. The FATF is, therefore, a “policy-making body” which works to generate the necessary legislative and regulatory reforms in these areas.
In recent years, the government and financial regulators have imposed more and more rules on financial institutions. In this way, they hope to promote the integrity of the financial system and to prevent new financial scandals. For example, there is legislation on the prevention of fraud, inside information, and money laundering and terrorist financing.
What about in Curacao?
Compliance is still in its infancy in Curacao. Especially compared to other countries. For example, the United States and the United Kingdom introduced regulations for the financial sector at the beginning of the last century. In the Netherlands and in Curacao, people started to work on ‘compliance’ legislation only after 1990.
Compliance has received increasing attention in recent years. Partly due to the embedding of European directives in national legislation, the number of obligations also increased sharply for Curacao. That is increasing the need for compliance. Only a few real estate agencies work according to all compliance guidelines in force on Curaçao.
Countries that are members of (member of) the FATF make their own laws. National Ordinance Reporting Point Unusual Transactions‘ (MOT) and ‘National Ordinance Identification for Services‘ (LID) are the laws for compliance of curaçao.
The Financial Investigation Unit (FIU) Curacao is a supervisor and checks whether brokers comply with the rules of these laws. These FIU laws have been in force since 2010 and have been further tightened in 2016.
FIU legislation for compliance is dynamic legislation; sanction lists are adjusted. For example, it may be forbidden for brokers to do business with people from certain countries. Such a ban can be withdrawn later when the situation changes. It is therefore important for brokers to keep up to date with the latest rules. This is why a number of real estate agencies work with training companies and/or appointed ‘compliance officers’.
Several brokers are members of the National Working Group of National Risk Assessment (NRA). The NRA is a forerunner of the audit that the World Bank will do in Curacao in the year 2022. The working group determines the current level of compliance and whether there are opportunities to do this better in the future.
More info about the NRA in this news article from The Curacao Chronicle.
FIU can conduct research into persons or companies if there is a reason to do so. FIU may also impose administrative fines on its own when a broker or other service providers do not comply with the laws. If there is a crime (for example, money laundering), the case is referred to the public prosecutor.
It is very important for a country like Curacao that service providers adhere to the international standard (legislation). In this way, we escape the image that Curacao is an island ‘where everything is possible’.
Does it also apply to European Dutch?
We notice that our American and Canadian customers are familiar with such compliance rules but that many European customers wonder why they should give so much information when they want to buy or sell a house on Curacao. After all, this is not necessary when they are involved in a real estate transaction in the Netherlands.
The rules on Curacao apply only to non-residents. In the Netherlands this is the same: the compliance rules do not apply to people who live in the Netherlands. After all, all sorts of information about its inhabitants is known to the municipality/tax authorities/government in the Netherlands. But if the customer comes from abroad, it is necessary to request more information about this customer when he wants to buy/sell a property.
What information and what is done with it?
In addition to a copy of a legalized passport and an extract from the birth register (both can be done via the municipality), buyers must also complete and sign a ‘source of wealth declaration’. This statement is accompanied by attachments, such as a salary slip or a copy of a bank or savings account statement, to the broker.
With this information, nothing is done in most cases. Only when there appears to be an unusual transaction, the name of the customer is passed on to the FIU. The FIU can then decide for themselves whether or not they wish to investigate further.
Brokers do not decide for themselves whether a transaction is unusual or not. This is done by the ‘compliance officer’, on the basis of rules drawn up for this purpose.
The legislator requires that real estate agents know their customers and that they do research on this. For the time being, only a few real estate agencies on Curacao comply with all the rules of this legislation.
When you want to sell a house through our office as a customer, you can be confident that we have a good understanding of the customer. That way you also keep out people with bad intentions.
For people who want to buy a house, it may be a little difficult to provide extra information, but everyone has to contribute to achieving FATF’s goals. This way we make Curacao and the world a better and safer place to live in.
Should you have any further questions about the FIU legislation on Curacao after reading this information, please send an e-mail to email@example.com
See also information from Fung-A-Loi & Samander Notarissen (in Dutch).