Unclear million-dollar transaction leads to suspicion of fraud, ABN Amro was allowed to terminate the relationship

Despite an extensive e-mail exchange between the auditor and ABN Amro, the business model of a retailer of perfumes, cosmetics and telephones remained unclear to the bank. Millions were converted, but ABN Amro, in its own words, strongly suspected that the company was involved in VAT fraud. The advance judge ruled in the preliminary case that the bank had to terminate the relationship with the customer because sufficient insight into the activities and payment flows had not been given.

The cosmetics retailer used to mainly make electronics and also has a beauty salon. The entrepreneur’s various companies banked at ABN Amro. Last October, as part of a customer survey, the bank asked for information about its business activities and several million transactions. An RA from Wesselman Accountants | Advisers sent answers on behalf of the client, but even after further questions and new answers from the auditor, according to ABN Amro, many ambiguities remained. The bank therefore sent letters to the companies in March this year, terminating the banking relationship with effect from May.

summary case management

The contractor and his companies brought summary proceedings against the bank in this regard. ABN AMRO claims in the preliminary lawsuit that the cosmetics retailer has made the payments it receives through its Bol.com account sufficiently transparent and that they appear legitimate, but that they only account for 5% of the turnover in its current account. The company has not been able to provide an explanation for the remaining 95% of its revenue, which comes from the sale of telecommunications equipment. From 1 January 2019 to 27 May 2021, a total amount of € 9,986,299.66 was credited to the company’s current account and an amount of € 9,832,602.25 was debited. It is striking that the credits in her account are continuously followed by debits, which means that the current account balance remains low. The cosmetics industry payment account appears to be used mainly as an escrow account for the transfer of large sums of money between parties that cannot be verified or can only be briefly verified. Phonetje Holland, JRA Products & Services, Snel Logistics and Management, APR Trading, AK Trading and Dutchstone Projectontwikkeling (the parties involved in the major transactions, ed.) are difficult to find in public sources. None of these parties have a functioning website or physical store. ABN AMRO also noted that these parties were often founded after 2017 and could immediately trade for millions of euros. Snel Logistics and JRA Products have been located in a notorious building in Heerhugowaard. That building was closed by the mayor of Heerhugowaard after many forms of criminal activity were found, including money laundering, tax evasion and many forms of fraud. Furthermore, ABN AMRO has established that all of these parties’ VAT numbers were withdrawn or found to be invalid shortly after the transaction with the cosmetics industry. ABN AMRO therefore strongly suspects that the company is involved in VAT fraud. The alleged multi-million dollar trade in cosmetics cannot be verified. There are no purchase, transport and insurance agreements, and there are no loan agreements between the group units. It appears that the substantial payments were never secured, and it has been unclear with what and whose seed capital the cosmetic retailer started its alleged multi-million dollar business. There is no evidence that goods have actually been purchased, resold and actually supplied by the cosmetics industry. The companies’ accountants only forwarded invoices. Nothing else is on paper. The revenue model for the cosmetics industry has remained unclear, and the company’s raison d’être as an apparent link in a longer B2B chain is incomprehensible to ABN AMRO.

The beauty salon is actually financed by the cosmetics trade. Financing a legitimate, labor-intensive, capital-poor business such as a beauty salon using presumably illegitimate means is a common form of money laundering. This constitutes an unacceptable risk for ABN AMRO.

Judgment in provisional legal aid judge

The director of the cosmetics industry, a holding company, has a point when he states that ABN AMRO has formulated very generally why the banking relationship was terminated. ABN AMRO must be expected to state in the cancellation letter and justify the specific circumstances that give rise to the cancellation. This is in the interest of the party terminating the banking relationship, so that it knows what to defend against. ABN AMRO can also be expected to be more accessible during the information process. (the director of, ed.) the holding company stated at the hearing that it was almost impossible to get someone from ABN AMRO on the phone, and that it took three days before he finally got to speak to an employee who had stepped in.

All this does not change the fact that it must have been clear to the cosmetics retailer based on the information requests that ABN AMRO should gain insight into its business model.

ABN AMRO’s questions, which aimed to gain insight into the cosmetics industry’s trade, have largely gone unanswered. The cosmetics trade has not sufficiently enabled ABN AMRO to get a handle on its revenue model. The company does not deal with distributors at the start of the chain or with telecom shops where the chain ends, but is a link in a longer chain of intermediaries. The relationship between the different levels is supplier and customer, but also vice versa. She has not provided any insight into how the company’s profitability or added value can be explained anyway. In the absence of added value in the supply chain, the cosmetics trade’s activities are very similar to pumping money back and forth, which is an indicator of money laundering and/or VAT fraud. The company has traded almost 10 million euros in telecommunications equipment in a relatively short time. How it raised seed capital to trade for millions of euros has remained unclear. There is no documentation of where the products come from and that they have actually been delivered. There are also no underlying agreements, because each time action was allegedly based on oral agreements. The conclusion is that, at the time of the termination, ABN AMRO did not have sufficient insight into the cosmetics trade’s activities and payment flows. The termination of the banking relationship with the company in question is therefore not unacceptable from the standards of fairness and reasonableness, nor is it contrary to ABN AMRO’s duty of care.

A balancing of interests does not change this. ABN AMRO’s interests in limiting the risk of money laundering and in particular not being associated with criminal offenses outweigh the cosmetics trade’s interests in maintaining the bank account with ABN AMRO. It also takes into account that the company now has a bank account in another bank.

ABN AMRO has rightly pointed out that the beauty salon poses an unacceptable risk of being involved in money laundering because that company is actually financed by the cosmetics industry BV. This means that the termination of the banking relationship with the beauty salon is not in itself unacceptable according to standards of reasonableness and fairness. However, because the beauty salon has not yet found another bank, unlike the cosmetics business, and it employs five employees, the interest in a short, temporary continuation of the banking relationship is greater than ABN AMRO’s interest in its immediate termination. ABN AMRO will therefore be required to continue the banking relationship for a further three months in the manner stated in the decision. No penalty will be attached to this judgment as it is assumed that ABN AMRO will comply with this judgment.

ABN AMRO has also terminated its relationship with the entrepreneur privately, because it has lost all confidence in him, seen in the light of the way in which he, as (indirect) director of the companies, has fulfilled his obligation to provide information, or rather failed to do so. It is the director (the holding company, ed.) who could and should have given ABN AMRO the desired clarity, but has not done so.
In the given circumstances, the termination of the relationship with the director is also not unacceptable by standards of fairness and reasonableness or in breach of the duty of care. Furthermore, as a result of this termination, the director will not be cut off from economic activity, now that he has been able to open a bank account elsewhere.

Although no questions were asked of the director in connection with the customer survey from ABN AMRO, she follows the fate of the group she belongs to. ABN AMRO was therefore also allowed to terminate the banking relationship with the director.

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