TERRORISM FINANCE: DUTCH AUTHORITY TO FREEZE ASSETS

UNCLAS SECTION 01 OF 02 THE HAGUE 002331 SIPDIS STATE FOR EUR/ERA E.O. 12958: N/A TAGS: ETTC PTER EFIN KTFN NL EUN SUBJECT: TERRORISM FINANCE: DUTCH AUTHORITY TO FREEZE ASSETS REF: A. STATE 193684 ¶B. THE HAGUE 0026 ¶C. THE HAGUE 1213 ¶D. THE HAGUE 1040 ¶E. THE HAGUE 834 ¶F. THE HAGUE 771 ¶1. The following is provided in response to ref A request for information on the status of the Netherlands' national authority to freeze assets related to terrorism financing. Ref B contains a detailed description of Dutch laws and regulations on terrorism financing and related money laundering activities as well as the relevant institutions responsible for implementing these standards. ¶2. NATIONAL AUTHORITY TO FREEZE: The Netherlands has national authority to identify, freeze and seize terrorist finance assets, based on the "Sanction Provision for the Duty to Report Terrorism" (Sanction Act),originally adopted in 1977 and amended on June 7, 2002, to include implementation of UNSCR 1373 and EU regulation 2580/2001. Involvement in financial transactions with individuals and/or organizations designated nationally, by the EU (Clearinghouse process),or UN lists (UNSCR 1267 and 1373) is a criminal offense. The Sanction Act allows measures to be taken against individuals or organizations on the basis of terrorist suspicion. Terrorist assets have been frozen based on the authority provided by the Sanction Act, UNSCRs, and EU Directives. ¶3. PROCESS AND LEGAL STANDARD: UNSCR designations are automatically incorporated into EU regulations and are applicable within the Dutch financial sector. A designation through the EU Clearinghouse requires a unanimous decision among member states, which is then applicable within the Dutch financial sector. At the national level, an inter-ministerial working group has been established to make decisions on designations and to facilitate coordination and communication on terrorist financing measures. The working group includes representatives from the Foreign Affairs Ministry, Justice Ministry, Finance Ministry, Netherlands Intelligence and Security Services (AIVD),Public Prosecutor, and financial sector supervisors. The AIVD has the primary responsibility of collecting information for potential designations by the working group. If the AIVD has an indication that an individual/organization supports an entity on the list, it can pass the information to the Public Prosecutor dealing with terrorist cases. The Public Prosecutor can act on the basis of the Criminal Law and according to its discretionary powers. If the police have specific information that the Sanctions Act has been violated, the Public Prosecutor can start a criminal investigation independently. The working group also considers designations and evidence presented by other countries, such as the U.S. ¶4. The Finance Ministry, in close coordination with the Foreign Affairs Ministry, distributes lists of designated entities whose assets must be frozen to financial institutions and relevant government bodies, including local tax authorities. Financial institutions screen lists of customers on a timely basis. Exact hits automatically lead to the freezing of all accounts of the customer. Personal information and transaction records are subsequently forwarded to AIVD through the Finance Ministry and the financial market supervisors. The 1992 Asset Seizure and Confiscation Act (Asset Seizure Act) was amended in 2003 to improve and strengthen options for identifying, freezing and seizing criminal assets. The police and special investigation services are responsible for enforcement in this area. ¶5. IMPLEMENTATION AND SUCCESSFUL CASES: According to Justice Ministry sources, the Netherlands has frozen more terrorist-related assets that any other EU member state. Forfeiture statistics provided by the Office of the Public Prosecutor show that assets forfeited and/or seized amounted to 7.9 million euros (8.4 million dollars) in 2002, 9.1 million euros (10.1 million dollars) in 2001 and 10 million euros (10.9 million dollars) in 2000. (These figures do not represent exclusively terrorist financing assets.) In July 2004, the Netherlands froze all financial assets of the Dutch branch of Al-Haramain. See ref C-F for further details. ¶6. OBSTACLES: Our working level contacts largely agree that the biggest obstacle to implementing national asset freezing authority is the large burden of proof that is required under Dutch law before any action can be taken against individuals or organizations on the basis of terrorist suspicions. Although no Dutch judge has ever overturned an asset freeze order under the Sanctions Act, Dutch officials have repeatedly expressed concern that such actions are vulnerable to challenge in local courts without legally sufficient supporting evidence. As a result, Dutch officials prefer to act under the umbrella of EU regulations and the EU Clearinghouse process. However, proposals are under consideration in the Second Chamber to shift the burden of proof in the Dutch Asset Seizure Act from the Public Prosecutor to the criminal. SOBEL