With the increasingly important role that international sanctions continue to play in society, the Netherlands is currently preparing to update and future-proof its domestic sanctions regime. Below we have summarized the proposed changes and update on the developments.
The plan to modernize the Dutch sanctions regime stems from the Report of the National Coordinator for Sanctions Compliance and Enforcement Stef Blok, published back in June 2022. The National Coordinator was appointed following the massive expansion of sanctions against Russia in response to the invasion of Ukraine in February 2022. The findings and recommendations of the National Coordinator have led to the government’s plan to improve and strengthen the legal framework for sanctions in the Netherlands.
As part of the modernization, the Dutch government initiated a public pre-consultation to present its initial proposals and gain feedback from relevant stakeholders early in the legislative process. As part of the public pre-consultation, the Dutch government published a consultation paper which outlines the building blocks of the future “Sanctions Act” with draft proposals. The public pre-consultation was only open for a limited period from 14 July 2023 until 25 august 2023, however, a formal consultation will take place once the final draft bill and accompanying explanatory memorandum have been finalised.
The preliminary proposals
In the pre-consultation paper, the government has described the preliminary proposals and provided draft legal texts to address the following elements:
- Extending and modernizing supervision rules (“Sanctions Gatekeepers”)
The pre-consultation paper proposes to expand the list of parties who will be subject to sanctions supervision (“gatekeepers”) given their role in economic life. These are parties that are involved in, for example, the creation and execution of contracts, transactions and the establishment of legal entities.
The government also intends to modernize the standards for sanctions supervision. The proposal largely builds on the standards of the anti-money laundering laws (’Wwft’), including KYC due diligence and screening parties related to customers/clients.
- Reporting requirements
The government is also examining how to improve the execution of reporting obligations. Here, the government is considering if the current set-up of multiple reporting points should be changed so that there is only one central reporting point.
- Administrative enforcement of sanctions violations
The pre-consultation paper also considers whether the new sanctions act should also provide for administrative enforcement of violations, in addition to the current criminal enforcement. The rationale behind this suggestion is that administrative enforcement may be more appropriate for certain cases given the nature and severity of the violation.
- Management and administration of (long-term) frozen assets and economic resources
The proposal also calls for clarity on the economic and societal consequences following the designation of an entity. For example, Dutch companies may suffer undesirable consequences if their parent company is designated.
- Entries in registers
The government is also exploring ways to link public registers for the purpose of sanctions screenings and ease compliance.
The pre-consultation paper is limited to a few topics and indicates the government’s initial considerations. The outline however shows that the plans for the modernized sanctions act are heavily rooted in the lessons learned from the Russia sanctions in force since February 2022. The proposal primarily focuses on addressing legal and practical issues that hinder or complicate compliance, expands screening obligations and provides the relevant authorities with more tools to address the economic and social consequences of sanctions.
The pre-consultation period concluded on 25 August 2023. The government will continue its preparation and publish the draft bill when the final public consultation will be held in due course.
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