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Some first lessons from the ING settlement

05 november 2018

The hunt for the facilitator has officially started

In an earlier edition of Hertoghs Considers, we discussed the recent ING settlement with the Public Prosecution Service and the question whether it is desirable to settle such a matter so quickly. However, we also want to give some critical comments on the settlement. It was remarkable that this was the first 'large and unusual transaction' for a so-called 'facilitator': persons or organisations, such as tax advisors, lawyers, notaries, trust offices and also banks, that are intentionally or unintentionally helping criminals to commit criminal activities. Such facilitators have a certain gatekeeper’s function in preventing and combating financial crime and tax crime.
 
Neglecting the gatekeeper’s function could in certain circumstances constitute a criminal offence. However, the boundary between negligent action and punishable action is by no means a strict one. As we pointed out earlier, the approach in the ING settlement seemed to be that intent was linked to the duty of care. So what lessons can be learned about the position of the facilitator in criminal tax law, financial criminal law and tax penalty law?
 
No knowledge, no punishment

According to the Public Prosecution Service, there was insufficient evidence to make individual criminal accusations against natural persons. This raises the question how it was possible to see ING as a perpetrator acting with deliberate intent. The fact that ING acted with extreme negligence is not in dispute. However, such negligence is not sufficient for intent.
 
Last year, we described in the journal Tijdschrift voor Sanctierecht & Onderneming that the Supreme Court had rightfully excluded an approach of conditional intent that was linked to the duty of care.
The negligence of actions can only play a limited role in the interpretation of intent. After all, the knowledge of the prohibited conduct is the key element.
The perpetrator ‘must have known’  that the prohibited conduct took place (or that there was a significant risk of this) and must have consciously accepted this. The term ‘should have known’ is therefore insufficient, because then the required awareness is absent. Although it indicates that the duty of care has been neglected, it does not indicate intentional action.
 
How far does the facilitator’s duty of care?
When we take a look at the Public Prosecutor Service’s official account of the facts, there is no sign of any knowledge on the part of ING. Multiple sections within the organisation were responsible for parts of the culpable behaviour. Apparently, none of these sections felt responsible for the implementation of the compliance policy and nobody had an overview of the whole situation. Internal signals from staff did not reach the managers. Especially in cases where knowledge of criminal offences in an organisation is rather fragmented and senior management has no knowledge of the culpable behaviour, it can be questioned whether the action was intentional.
 
Up to now, the court has not been willing to deduce intent from such circumstances. Does ING’s criminal liability break the trend with this case law? Unfortunately, the Public Prosecutor Service’s official account of the facts does not clarify this matter. An additional disadvantage of a settlement is that there is no fundamental judicial control since no court was involved in assessing ING’s criminal liability.
  
Consequently, the part that the duty of care plays in the interpretation of the facilitator’s individual responsibility has been given too little attention. There have only been a limited number of legal proceedings against facilitators and a small number of co-perpetrators who have been fined for tax fraud since 2014, so that does not give us any clues. This keeps us in the dark about the scope of the facilitator’s duty of care. This is inconsistent with the principle of legality.

If negligent behaviour does lead to a criminal offence, then in fact a disguised form of strict liability is being introduced to criminal law. In our opinion, that is a bridge too far. Strict liability is in principle excluded in Dutch criminal law and that is with good reason as in practice, a facilitator would then immediately become liable once a criminal offence arises in the sector in which they operate. This development would be extremely undesirable.

Facilitators need to watch out

In conclusion, the 'hunt' for the facilitator seems to have officially started with ING as a leading example. If we may believe the FIOD director’s words, investigation is being carried out on a big scale into ‘financial advisors, trusts or notaries who enable criminal money to be brought into the financial system’.

Moreover, the question comes to mind whether such punitive action is the most effective form of enforcement. Of course, it is to be welcomed that facilitators who consciously enable criminal activities are prosecuted, but is this enthusiasm also appropriate for the unintentional facilitator? Particularly now it is unclear to what extent the facilitator has a duty of care, it is questionable whether the desired result will be achieved by a settlement or a large fine. In the coming period, it will become evident whether this hunt is going to continue and, if so, which facilitators will ultimately be caught. Until then, facilitators need to watch out.