Financial Regulation – Q2 2023 Update

NL Law
EU Law

On or around 1 July 2023, notable amendments to regulations applicable to trust offices, financial service providers, market operators, and those holding a qualifying holding in a Dutch regulated financial institution entered into force. These legislative changes are part of a bi-annual cycle of changes to legislation relevant to the Dutch financial markets.

Financial Markets Amendment Act 2022

Changes for applicants and holders of a declaration of no objection

  • From 1 July 2023, obtaining or holding a declaration of no objection (verklaring van geen bezwaar, DNO) from the Dutch Central Bank (De Nederlandsche Bank, DNB) in relation to holding a qualifying holding in a Dutch financial institution comes with certain additional requirements.
  • Firstly, DNO-holders will be subject to an ongoing reputation requirement. Previously, the reputation test was only relevant in the DNO application phase. Now, the reputation requirement applies continuously to parties holding a DNO. In practice, DNB can at any time request documents for a renewed reputation test and DNB may revoke the DNO if its finds that the DNO holder no longer meets the applicable reputational requirements. Those already holding a DNO on 1 July 2023 are deemed to comply with the ongoing reputation requirement until a change affecting the reputation triggers a reassessment by DNB.
  • Secondly, additional documentation must be provided to DNB as part of the DNO application or a reputation re-assessment of a current DNO holder. The Financial Markets Amendment Decree 2022 (the Amendment Decree) that applies as of 1 July 2023 provides that a list of referees must also be shared with DNB. Previously, this was only the case for the suitability assessment of daily policymakers of financial institutions.
  • Thirdly, it is expected that an amended regime for obtaining and amending DNOs for group companies will enter into force in the coming months, although the effective date remains unknown. The amendments stipulate that DNB must screen the reputation and financial soundness of each group company as part of a proportional assessment of the DNO application of the group companies. Moreover, holders of a group DNO must notify and obtain prior approval from DNB in relation to changes that would have triggered a DNO application requirement if the DNO holder had not had a group DNO (i.e. a new group company will start holding a qualifying shareholding, or a group company crosses a DNO holding bandwidth).

Other changes

  • The Amendment Decree also formalises that Alternative Investment Fund Managers must file their periodic reports with the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten, AFM). We recently published a blog concerning the practical aspects of the so-called 'Annex IV reporting' required for non-EU AIFMs that apply since 1 January 2023.
  • After 1 July 2023, licensed market operators (marktexploitanten) no longer need to obtain the AFM's prior approval for the amendment of (i) the rules of the market operator, (ii) the rules for admitting financial instruments to the market, or (iii) the rules governing access to the market. We note that a notification obligation for these changes remains in place.

Trust Office Supervision Amendment Act 2018 in relation to measures to prohibit trust services in situations with a high integrity risk

Trust offices are further restricted in their provision of services from 1 July 2023. The previously published amendments to the Trust Offices Supervision Act 2018 (Wet toezicht trustkantoren 2018) prohibit the provision of a number of trust services that are considered services with a high integrity risk. These include acting as a conduit company (doorstroomvennootschappen) and an extension of the ban on trust services to clients, object companies (doelvennootschappen) and ultimate beneficial owners based on their country of origin, namely a ban on providing trust services to clients in high-risk third countries and in countries on the EU list of non-cooperative countries for tax purposes.

Introduction of a 'comparison chart' (vergelijkingskaart) for financial service providers

From 1 October 2023 at the latest, financial service providers (financiëledienstverleners) will have to provide a standardised 'comparison chart' (vergelijkingskaart) as part of the pre-contractual information. The comparison chart will replace the current service document (dienstverleningsdocument). The changes to the amended Further Regulation on the Supervision of the Conduct of Financial Undertakings under the Financial Supervision Act (Nadere regeling gedragstoezicht financiële ondernemingen Wft) entered into force on 1 April 2023. Until 1 October 2023, financial service providers may choose to use the comparison chart or the service provision document, provided that the information in the service provision document is up to date.

Changes to the Policy rule on Single Customer Status

On 1 July 2023, the final amendments to the Policy Rule on Single Customer Status (Beleidsregel individueel klantbeeld 2017) entered into force. The amendments relate to the data that banks must be able to submit to DNB with respect to their clients for the purpose of the deposit guarantee scheme. The policy rule also clarifies that a bank account should be considered dormant if no transactions have been carried out from or in the account for more than 24 months.

Some other notable developments

  • On 12 June 2023 the Dutch Government published the legislative Act relating to the implementation of the Non-Performing Loans Directive (EU/2021/2176). The proposal set out, among other things, a licence regime for certain parties providing credit services with respect to non-performing loans. Parties may respond until 11 July 2023.
  • On 27 June 2023, the European Commission adopted the Taxonomy Environmental and climate Delegated Act. The new delegated Act supplements the Taxonomy Regulation framework by defining the objectives of: (i) sustainable use and protection of water and marine resources; (ii) transition to a circular economy; (iii) pollution prevention and control; and (iv) protection and restoration of biodiversity and ecosystems. The European Commission has also adopted an amended Taxonomy Delegated Regulation, supplementing the objectives of (i) climate change mitigation, and (ii) climate change adaptation of the Taxonomy Regulation.
  • On 28 June 2023, the European Commission published its proposal for the revised Payment Services Directive ("PSD3"), a new Payment Services Regulation and a Regulation on a framework for financial data access. These proposed changes relate to the digitalisation of the payments market (e.g., open banking), the risk and opportunities it represents and the protection of consumers (e.g., relating to transparency and fraud).