Anti-Money Laundering, Terrorist Financing and Client Due Diligence
Legal framework
Notaries are obliged entities under anti-money laundering and counter-terrorist financing legislation. They must apply client due diligence, monitor transactions, keep records and report suspicious activity to the financial intelligence unit.
Client due diligence
CDD includes identifying the client and beneficial owner, verifying identity from reliable sources, understanding the purpose and nature of the relationship, and conducting ongoing monitoring. Enhanced due diligence applies to politically exposed persons, high-risk jurisdictions and complex structures. Simplified measures apply only in defined low-risk cases.
Red flags
Traps in questions include: a client insisting on cash, using a representative without explanation, structuring transactions below thresholds, or pressing for unusual speed. The notary must not tip off the client that a report has been made.
Record keeping and reporting
Records must be kept for the statutory period. Suspicious transaction reports go to the financial intelligence unit, not to the police or the Chamber. Failure to report is a disciplinary and possibly criminal matter.
Worked example
A buyer pays in cash through several intermediaries and cannot explain the source of funds. The notary applies enhanced due diligence, documents the findings, and files a suspicious transaction report without informing the client. Proceeding with the act without reporting is the error the question tests.
Ethics, Professional Responsibility and Liability
Ethical duties
Notarial ethics require independence, impartiality, confidentiality, integrity and avoidance of conflicts of interest. The notary must not act in a matter where personal interest or a close relationship compromises impartiality. Advertising and fee practices are regulated.
Disciplinary liability
Disciplinary proceedings are conducted through the Notary Chamber. Sanctions range from warning to suspension or revocation of licence. Grounds include breach of law, ethics, secrecy, or failure to comply with chamber decisions. Traps: confusing disciplinary liability with civil or criminal liability, and assuming the Chamber can impose criminal punishment.
Civil and criminal liability
Civil liability arises for unlawful notarial acts causing damage, often covered by insurance for private notaries. Criminal liability applies to abuse of office or forgery. The candidate must distinguish the three tracks and their consequences.
Unlawful acts
An act is unlawful if performed outside competence, without proper verification, or in breach of mandatory form. The court may annul it. The notary may also be disciplined and sued.
Rule of thumb
Ask: which track applies (disciplinary, civil, criminal), which body decides, and what remedy follows? A single act can trigger all three, but each has its own procedure and standard of proof.