Financial Supervision

What we do

Financial supervisory law has been subject to significant change in recent years. Compliance with laws and regulations is monitored by both national and international regulators. Due to the increasing administrative burden on enterprises within financial supervisory law, specialized knowledge is by no means a luxury.

Companies operating in financial markets face various regulatory frameworks. Companies that qualify as investment institutions or financial service providers (such as Fintech) are also subject to financial supervisory law. We assist financial service providers and investment institutions with, among other things:

• license applications to the Netherlands Authority for the Financial Markets (AFM)
• compliance with the Financial Supervision Act (Wft) and the Anti-Money Laundering and Counter-Terrorism Financing Act (Wwft)
• issue shares on regulated markets
• attracting alternative financing with the help of crowdfunding
• Crypto transactions & exchanges
• Prospectus requirement
• IPO
• SPAC
• Supervisory disputes
• Security

We have the knowledge and expertise to assume diverse roles: from advisory services to dispute resolution. We have an experienced team of lawyers and legal experts in the field of financial supervision. Contact us to discuss the possibilities.

Financial supervision within financial law

Financial supervision is a specialized subfield of the broader field of financial law. While financial law deals with legal relationships in financial markets, financial supervision specifically revolves around the public law rules of the game: who requires a license, what ongoing requirements must a company meet, and how do regulators enforce those rules? For our clients—from an international group with its own compliance department to the smaller financial service provider or the baker on the corner considering a payment service—our lawyers and in-house counsel translate those rules into concrete, workable choices.

Twin Peaks: AFM and DNB

The Netherlands has a so-called Twin Peaks model for the supervision of the financial sector. Two supervisors divide the tasks:

• The Netherlands Authority for the Financial Markets (AFM) exercises conduct supervision: it monitors careful service provision to customers, transparent information, fair market operation, and the combating of market abuse (such as insider trading and price manipulation). The AFM is also the licensing authority for, among others, investment firms, investment institutions, and financial service providers.
• The Dutch Central Bank (DNB) exercises prudential supervision: it monitors the financial soundness and stability of institutions and is the licensing authority for, among others, banks, insurers, and payment service providers.

The core of all this lies in the Financial Supervision Act (Wft), supplemented by, among others, the Anti-Money Laundering and Counter-Terrorism Financing Act (Wwft) and, for trust offices, the Trust Offices Supervision Act 2018 (Wtt 2018). Which supervisory authority is relevant to your company depends on the activity. We map this out and determine the right course of action together with you. Also read our pages on FinTech and trust offices.

Permit requirement, exemption and waiver

The first question is almost always: do my activities fall under the Wft, and do I need a license for them? A license is only granted if your company is financially sound and meets the requirements of the Wft. Not every activity requires a license: the law provides for exemptions , and the supervisory authority can grant a waiver . For smaller entrepreneurs, this can make the difference between being subject to ongoing supervision or not.

When assessing a license application, the supervisory authority tests, among other things, the suitability and reliability of directors and policymakers (the so-called fit-and-proper or suitability and reliability assessment), the organization of business operations, and the controlled and ethical conduct of the business. We prepare the application, direct the assessment of directors, and ensure that the governance and compliance functions align with the requirements of the AFM or DNB.

Ongoing supervision and compliance

A license is not an endpoint, but a beginning. Once subject to the Wft, an entity is subject to continuous supervision. The AFM and DNB can request information, conduct thematic investigations—even without concrete suspicion—and assess business operations against the law. An enterprise must continuously comply with requirements regarding integrity and controlled business operations, customer care duties, the reporting of incidents, and compliance with Wwft obligations (customer due diligence, transaction monitoring, and reporting of unusual transactions).

We structure compliance pragmatically: no thicker than necessary, but comprehensive. For a large corporation, this means alignment with the internal compliance and legal departments; for a smaller enterprise, we build the foundation the regulator expects, without unnecessary overhead.

Enforcement, sanctions and reputation

If a supervisor identifies a violation, they have a robust enforcement toolkit at their disposal. The most important measures are:

• an instruction to follow a specific course of action;
• an order subject to a penalty payment to terminate a violation;
• an administrative fine, with fine categories that can amount to €4,000,000 — and higher when the benefit obtained is substantial;
• a public warning or publication of the decision;
• in the extreme case, revocation of the permit.

Many of these decisions are made public. It is precisely this publication that can lead to significant reputational damage, while judicial review of publication decisions is often restrained. Therefore, it is essential to submit a well-founded view at an early stage—at the time of the intention to enforce— and to closely monitor the procedure

Objection and appeal against decisions of the AFM and DNB

An enforcement decision by the AFM or DNB is a decision within the meaning of the General Administrative Law Act (Awb). An objection lodged against this, followed by an appeal to the administrative court—typically the District Court of Rotterdam in financial supervision cases and, on appeal, the Trade and Industry Appeals Tribunal (CBb). In our defense, we assess not only the substance but also procedural aspects that may work to your advantage: has the violation potentially become time-barred, has the reasonable time limit under Article 6 of the ECHR been exceeded (which may lead to a reduction of the fine), does the ne bis in idemprinciple apply, or does a right to silence under the nemo tenetur principle apply in the case of a punitive sanction? In the event of impending or ongoing disputes, we work closely with our financial litigation.

Frequently asked questions about financial supervision

Do I need a Wft license?
That depends on your activity. Many financial activities — such as offering financial products, investment services, or payment services — require a license from the AFM or DNB. Sometimes an exemption applies or a waiver is possible. We assess whether you fall under the Wft and which route is most suitable.

What is the difference between the AFM and DNB?
The AFM exercises conduct supervision (diligent service provision and fair markets), while DNB exercises prudential supervision (financial soundness and stability). For many enterprises, one of the two is the primary supervisor, but sometimes you have to deal with both.

The AFM or DNB has announced an investigation. What now?
Engage specialist assistance at an early stage. We guide you through the investigation, safeguard your rights, and ensure that your response and any views are legally and factually strong, to prevent enforcement and publication where possible.

Can I object to a fine?
Yes. You can object to a fine decision and subsequently lodge an appeal with the administrative court. In doing so, we consider both the substance and procedural grounds such as the statute of limitations, exceeding the reasonable time limit, and ne bis in idem.

Does this also apply to small businesses?
Yes. The Wft extends beyond large institutions. A smaller company can also fall under its scope, for example when offering financial products, a payment service, or through the acquisition of a supervised party. We tailor our approach and costs to the size of your company.