Our Trade, Industry and Logistics team regularly publishes articles as part of the series “Ten Frequently Asked Questions About…”. Through this series, we aim to provide accessible and practical information on specific legal concepts, topics and current developments. Should you have an eleventh question after reading these ten frequently asked questions, we would of course be happy to assist you. You can contact one of our TIL (Trade, Industry & Logistics) colleagues for further information.
The ten most frequently asked questions about bank inquiries in potentially high‑risk transactions.
1. Why does the bank ask questions about a specific transaction?
Banks have a statutory obligation to conduct customer due diligence and transaction monitoring, including under Dutch anti‑money laundering legislation and EU, US and other sanctions regimes. If a transaction may breach sanctions legislation, the bank is required to further investigate its origin, destination and background. Where a violation is identified, the bank is obliged to report this to the relevant authorities.
2. Do bank inquiries indicate that my company has violated (international) legislation?
No. The mere fact that a bank asks questions does not automatically mean that a violation has occurred. In most cases, the inquiry is triggered by a risk signal or a potential link to a country or party subject to sanctions. That said, it is crucial to respond to such questions in a timely and careful manner. We recommend engaging professional support at an early stage to ensure that the process is handled efficiently and appropriately.
3. What does the bank inquiry process typically involve?
If a bank has doubts about a transaction, it will usually send a questionnaire that must be completed. The bank may also request additional documentation, such as contracts or invoices. Increasingly, banks also ask companies to explain their internal sanctions and screening policies, often referred to as an Internal Compliance Programme (ICP).
4. Is it advisable to engage legal counsel?
Yes. Responding to bank inquiries may involve legal and reputational risks. A lawyer can assist in structuring the information carefully, assessing the risks associated with specific transactions, and preventing incomplete or inconsistent responses that could lead to further questions or complications.
5. What is meant by “sanctioned parties”?
Sanctioned parties include natural persons, legal entities or organisations that are listed on sanctions lists issued by the European Union, the United Nations, the United States, including OFAC, or other authorities. Transactions that are indirectly connected to such parties may also fall within the scope of sanctions legislation.
6. How can I verify whether my business partner is listed on a sanctions list?
While official sanctions lists are publicly available, consulting and correctly interpreting them is complex in practice. The lists are extensive and subject to frequent changes. Companies are therefore well advised to use specialised screening software or seek legal advice.
7. Can the bank block my account or payments?
Yes. Where there is a suspected sanctions violation, banks are required to suspend payments or temporarily freeze accounts. These measures are generally preventive in nature and aim to ensure that the bank itself does not breach sanctions legislation.
8. Can my company or its management be held liable for a sanctions violation?
Yes. Breaches of sanctions legislation may result in administrative penalties, such as fines, as well as criminal liability, which may extend beyond financial sanctions alone. In certain circumstances, personal liability of directors or officers may also arise. It is therefore essential to act with due care and seek expert advice in a timely manner.
9. How can my company reduce risks going forward?
Our advice is to establish and implement a clear and workable sanctions and compliance policy. This includes, among other things, pre‑transaction screening of business partners, contractual safeguards, and well‑defined internal procedures for transaction monitoring.
10. How can Kneppelhout assist with sanctions‑related matters?
Kneppelhout advises companies on sanctions regulations in the broadest sense. This includes assisting with responding to bank inquiries, reviewing operational or screening processes, or fully setting up a practical Internal Compliance Programme (ICP).
Where necessary, we also support companies wishing to make a voluntary disclosure of a potential sanctions breach or advise on whether certain transactions are still permitted. We help companies gain control over this complex area. In addition, our firm is registered with several banks as a recommended partner for guiding clients through these types of processes.
More information
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