Will Reliance on Confidentiality in KYC Check Succeed?

We are regularly involved in proceedings concerning the termination of banking relationships. In a recent case in which I acted as counsel alongside my colleague Eva Jagt, a bank customer invoked its duty of confidentiality vis-à-vis its  clients as a legal professional – though not as an attorney – during the bank’s customer due diligence (“CDD”) into money laundering risks. This led to an interesting discussion and judgment, which I will discuss below. The published ruling of the Amsterdam District Court can be found here. 

Banks are regarded as the gatekeepers of the financial system. Under the Money Laundering and Terrorist Financing Prevention Act (“Wwft”) they are required, among other things, to investigate (potentially) high-risk customers and transactions. The practical application of these AML obligations has proven to be challenging. Following earlier settlements with ING and ABN AMRO, the Public Prosecution Service recently announced that it would prosecute Rabobank for potentially inadequate anti-money laundering policies.[1] On the other hand, Minister of Finance Eelco Heinen wrote on the 14th of May 2025 in a letter to Parliament that banks' anti-money laundering approach in recent years had been “excessive”, with disproportionate consequences for customers. This illustrates the balancing act banks find themselves in.

If a customer fails to sufficiently cooperate with the CDD process, or if the outcome of that process reveals unmanageable risks, the bank may (and sometimes must) terminate the banking relationship.[2] This has a major impact for the customer – a bank account is indispensable for participation in today’s economy and society. If the customer disagrees with the bank’s decision, they can have it reviewed by the courts. That is often when we get involved, as in the case discussed here. 

In short, the situation is as follows:

• The customer is a company providing legal and notarial services. It operates internationally, including in Iran. The customer does not employ any attorney or notaries itself and therefore does not benefit from a statutory duty of confidentiality.
• The bank initiates a customer investigation after identifying potentially high-risk transactions under the Wwft.
• From the outset, the customer refuses to provide certain information and documentation about its services and clients, invoking its duty of confidentiality as a legal professional/litigation consultant. As a result, the bank is unable to verify the legitimacy of the transactions.
• The bank took the view that the customer could not invoke such a duty of confidentiality and, due to insufficient cooperation, gave notice of termination of the relationship.
• The customer initiated proceedings before the Amsterdam District Court, arguing that it had cooperated sufficiently and that the bank must respect its duty of confidentiality towards clients. 

Interestingly, something similar occurred in 2021/2022 between banks and notaries. Banks requested information about potentially high-risk transactions through notaries’ escrow accounts, as required by the Wwft and the Dutch Central Bank (DNB).0020Notaries, however, were bound by their statutory professional privilege. [1] In addition, notaries themselves have AML obligations under the Wwft and are subject to disciplinary supervision.

After intervention by the Royal Dutch Notarial Association and consultations among stakeholders, a solution was reached at the end of 2022. Banks may now rely on a notary’s declaration stating that the requested information cannot be disclosed due to professional privilege. The notary must nevertheless provide the bank with information on the AML checks performed and notify the Financial Supervision Office (BFT) of having issued such a declaration. The BFT can then verify whether the claim of privilege was legitimate.

This illustrates that customers cannot simply invoke confidentiality against a bank, even where that confidentiality is enshrined in law. All the more so for legal service providers who are not subject to disciplinary oversight or other forms of independent supervision.

Back to the case: the judge first of all states that the parties have agreed that the bank may terminate the banking relationship (Art. 35 ABV). the court started from the premise that the parties had agreed that the bank could terminate the relationship (art. 35 of the General Banking Terms). Termination is only not permitted in exceptional circumstances where it would be ‘unacceptable.’ The customer’s objections did not meet this high threshold:

• A large number of the customer’s clients were based in countries with high or increased money laundering risks. The bank had already terminated relationships with some of these clients because they themselves posed an unacceptable risk.
• It was established that the customer, despite repeated requests, failed to provide full transparency on the transactions, invoking confidentiality.
• The customer is not subject to disciplinary supervision like other professionals with privilege, and its reliance on confidentiality was overly broad and insufficiently substantiated.
• The integrity risk underlying the bank’s termination was sufficiently plausible.

The takeaway is that invoking confidentiality does not automatically relieve a customer of the duty to provide information to the bank. What is notable, however, is that the court did not explicitly hold that the customer lacked any confidentiality obligation, even though it was clear that the legal consultant did not have statutory privilege. The court merely concluded that the claim was ‘overly broad’ and ‘insufficiently substantiated.’ This seems to leave some room for a non-statutory duty of confidentiality, provided it is sufficiently specific and well-founded. In practice, however, I find it hard to imagine such a claim prevailing, given the difficulties that even notaries faced in the past, and the fact that the bank’s duty to investigate is expressly laid down in law.

Please feel free to contact  Joost Achterberg, Eva Jagt or Julian den Hertog.

[1] https://fd.nl/bedrijfsleven/1551978/om-vervolgt-rabobank-wegens-schending-antiwitwaswet

[2] Under Article 35 of the General Banking Terms (ABV), banks generally have a contractual right to terminate. They may exercise this right, unless doing so would be unacceptable. In certain circumstances, banks are also obliged to terminate under Article 5(3) of the Dutch Anti-Money Laundering and Counter-Terrorist Financing Act (Wwft). In such cases, a test of unacceptability will in principle no longer apply.

[3] Section 22 of the Dutch Civil-Law Notaries Act.