Steffie Schwillens

 Jeroen: Steffie Schwillens, thanks for taking the time to speak to Leaders in Finance in the run-up to the Leaders in Finance AML event on the 3^rd of October 2024. For those who might not know you—though that is likely a small group at this point, given your long-standing presence in the field—could you give us a brief introduction about yourself?

Steffie: Of course, thank you. My name is Steffie Schwillens, and I am the Head of Financial Crime Supervision on the banking sector within the Dutch Central Bank (DNB). I am 38 years old and have been with the Dutch Central Bank for about 15 years. I initially worked in prudential supervision, focusing on financial risks. For the past three years, I have transitioned to integrity supervision, where I am responsible for AML, sanctions, and corruption oversight, with a primary focus on WWFT and sanction law. It is also worth noting that I am one of several department heads at DNB, with colleagues who oversee other sectors such as trusts, pension funds, insurance companies, and payment institutions.

Jeroen: You have been with Dutch Central Bank for quite a while now. What makes it such an interesting employer for you?

Steffie: It is for sure an interesting employer, once in a while I keep telling myself it is time to move on, but something always keeps me there. I have the pleasure of working with many great, enthusiastic and talented colleagues and our work is multifaceted and analytically challenging. I joined DNB soon after completing my economics studies, right in the midst of the financial crisis when confidence in the financial sector was lost with for example the Lehman Brothers collapse in 2008. This was an interesting period to start as a young economist. Over the past 15 years, there have been numerous crises—economic, health-related like COVID, the euro crisis, and the war in Ukraine—all of which have kept my work both challenging and relevant. Whether in my role as a prudential supervisor or now as an integrity supervisor, each crisis has brought new, professionally engaging challenges. I have also had the privilege of working on different things and topics within the bank, many of which are in the news daily, keeping the job interesting.

Jeroen: The WWFT has been in the media a lot over the recent years. What would you say is the biggest challenge now from a regulatory perspective?

Steffie: I think there are several. Over the past few years, we have discussed the shift from recovery to balance, as highlighted in our widely referenced paper. The financial sector has made significant progress in stepping up its game, though there is still much work to be done. However, things have become more complicated. We are seeing unwanted side effects, such as de-risking and discrimination, which still need our attention. You also see societal unease and less understanding about why banks ask so many questions, even for something as simple as opening a savings account or applying for a mortgage. The challenge now is navigating this complex environment where the sector still needs to improve, but also has to make choices. Where are the real risks? Where do we have to put our effort, and where can we do less comfortably? This is not just a challenge for banks, but also for us as supervisors, as we move from theory to practical application. The urgency of issues like discrimination and the ongoing discussion around cash handling only adds to the complexity. We are playing on multiple chessboards simultaneously, and maintaining balance remains a significant challenge. And, of course, there is technology, which is already impacting our work and will continue to be a major game-changer in the coming years.

Jeroen: You mentioned the report ‘From recovery to balance’ and we have spoken about it several times. Would you say that Dutch banks are now actually adopting a risk-based approach?

Steffie: No, not enough. And I also understand why.

Jeroen: Why do you understand it?

Steffie: Because it is difficult to implement a truly risk-based approach. To do so, you need to have all your data in order to be able to see what is actually a risk, and what is not. You also need to be confident that if you decide not to take action because something is believed to be low risk, your stakeholders, including supervisors, will concur and accept that mistakes will happen. Plus, you have to shift entire organizations. In large institutions where thousands of employees follow processes and procedures that can span hundreds of pages, making consistent adjustments is extremely difficult. It is not as simple as pushing one button. We are making progress, but I do not think anyone in the sector would say we are already there or are working in a truly risk-based manner everywhere. Most people would likely admit that they still spend too much time on low-risk work. That is the honest truth.

Jeroen: That is a very clear answer. There are two other developments that have received a lot of attention, and I would love to hear your thoughts on them, if you are willing to share.

First, Transaction Monitoring Netherlands (TMNL) had kind of gone ‘belly up’, I would say. From a regulator’s perspective, is it unfortunate that TMNL is not going the way it was supposed to?

Steffie: I think DNB has been transparent about our positive stance on the banks’ efforts to explore more effective ways to do transaction monitoring by combining data. We supported this initiative with the expectation that upcoming legislation would facilitate it. That has turned out to be different. From a personal perspective, I do think it is a shame. Pooling data could have provided better insights into true risks, understanding that there are privacy issues that should be dealt with thoroughly. However, decisions must be made between different perspectives. I think AMLR gives some room and more clarity  for collaboration, and I hope it has not discouraged the sector from exploring future possibilities. Despite the disappointment over the current outcome, we have gained valuable insights from this process.

Jeroen: Thank you. Another major development is the upcoming European regulations concerning AMLA and regulatory authority. From your perspective as a Dutch regulator, what are your initial thoughts on these developments? Given that these changes have been anticipated for years and are now coming into effect, how do they impact the regulatory landscape in the Netherlands?

Steffie: Yes, it is an exciting time. We have been discussing these developments for a while, and now they are finally here. Overall, I view this as a positive shift, particularly from a macro and European perspective, creating a level playing field across Europe and facilitating mutual learning. The experience with the Single Supervisory Mechanism (SSM) and the prudential regulations has shown that banks have indeed become stronger as a result, even though it has also brought challenges and complexities. It is easier as a small and local player to take quicker action, but at the same time there is less impact. I am positive about the steps that have been taken and hope we can attract enough Dutch talent to AMLA to present our views and experiences from recent years, working closely with the sector.

Jeroen: If you compare the AMLR with the previous topic about the risk-based approach, do you think there is still enough room to maneuver?

Steffie: Yes, I do.

Jeroen: So it is not shifting towards a more rule-based approach again?

Steffie: Not necessarily. In fact, I believe that some of the issues we faced with the WWFT are resolved by the AMLR. While it brings new challenges, I think we still have enough room to maneuver. We just need to find a new balance in the bigger playing field, which will be interesting for all of us.

Jeroen: Last question from my side: As we organize this AML event for the fourth time in the Netherlands, is there something you are particularly interested in to learn that day?

Steffie: I am particularly interested in hearing from the person with firsthand experience in money laundering. This can help us all to gain insight  into how we can improve our impact and make it more challenging for those engaged in illicit activities to reap the benefits of their criminal activities. In essence, I appreciate these sessions as they provide a chance to speak to each other in an informal way to discuss our different perspectives. I am happy to hear that the privacy authority will be present, since they are an important player in the field. Overall, I’m looking forward to a productive discussion where, despite our different roles, we share a common goal of improving our approach to AML.

Jeroen: Thank you once again Steffie Schwillens from the Dutch Central Bank, for taking the time to speak to Leaders in Finance for this pre-event interview in the run-up to the Leaders in Finance AML Netherlands event on October 3^rd, 2024. We are excited to have you actively participating and look forward to your insights.

Steffie: Thank you!