‘Dammed if you do

In a rather handy follow-on to my last blog post, which discussed my reasons for supporting the inclusion in the AML family of businesses that sell services for cash, Amsterdam’s administrative court has taken an interesting step.  A team of experts from, among others, the city authorities, the Public Prosecution Service and the police has decided to reverse the burden of proof for restaurants, bars, pubs and cafés applying for licences to trade in Amsterdam.  In short, applicants will now have to prove that their source of funds is non-criminal before a licence will be considered.  Previously the burden of proof was on the municipality: the city licensing authorities could refuse or revoke a permit to trade only if it could prove that the establishment’s money was the proceeds of crime.  Now, if the source of funds is not clearly legitimate, the permit application will not be processed.  And the system is already taking effect: the municipality recently refused a permit for a restaurant on the banks of Sloterplas – an artificial lake in Amsterdam popular for water-sports – because the entrepreneur could not sufficiently demonstrate that the investment money was clean.

The aim is to ensure that dodgy money is not used to bankroll businesses in Amsterdam, particularly as such cash-intensive businesses – once established – are often used for future laundering.  The city has tried other ways to tackle the problem.  In June 2003 the BIBOB (Wet Bevordering Integriteitsbeoordelingen door het Openbaar Bestuur – or Public Administration Probity in Decision-Making Act) Law came into effect, giving Dutch administrative authorities the power to refuse contracts, subsidies or permits for organisations and companies if they have serious doubts about the integrity of the applicant.  And in April 2009 the Amsterdam authorities withdrew the operating permits of the Delta Hotel, the Hotel De Korenaer, the Hotel Keizerhof and an Intalian restaurant called Silicio – all were in the touristy Damrak area, and all belonged to the controversial Barazani family.  Asaf Barazani had made clear his opposition to plans to clean up the area; as Damrak is the street that runs from Central Station to Dam Square, it is usually the first street tourists see when they enter the city, and there were hopes to turn it into a “red carpet” entrance to the city.  Referred to by locals as the “Kosher mafia”, the Israeli Barazani family owned some fifteen buildings along Damrak.  In 2004 the family was investigated on suspicion of money laundering, and after those licences were withdrawn in 2009 some of their properties were sold to the municipality for forty million euros.  Members of the Barazani family were later convicted of tax evasion.

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