Overview of recent regulatory developments in Financial Services
This overview provides a selection of relevant legal developments regarding financial services regulation including a draft policy by the AFM on sound information, the European ban on binary options and restrictions for CFDs, enhanced focus on consumer credit checks and an update on PSD2 and new publication rights for the Dutch regulators.
On 1 October 2018, the new rules on insurance distribution entered into force. The rules, commonly known as the IDD regime, require insurance undertakings and insurance distributors to meet higher standards regarding the sale and distribution of insurance products. Insurance distributors (i.e. the insurance intermediaries) in particular must meet further requirements, including those on product distribution governance. This requires certain changes to policies and procedures. Apart from that, the new regime introduces new opportunities such as those for tied intermediaries of other intermediaries. New prohibitions have also been introduced, including on tied sales. For further information, we also refer to our January and July 2018 News Updates.
US, Swiss and Australian investment firms that have notified the AFM in the past that they wish to rely on the 'Article 10 exemption' when servicing clients in the Netherlands are required to notify the AFM prior to 1 January 2019 if they wish to continue to rely on this exemption. As a background, this exempts these investment firms from Dutch licensing. The reason for this re-notification is found in the introduction of the MiFID II regime on 3 January 2018. As a result, servicing non-professional clients in the Netherlands is no longer allowed without a Dutch licensed branch. Consequently, this re-notification is meant to make sure that the exempted investment firms confirm to the AFM that they will only service professional clients (and so do not need to set up a Dutch branch). In our experience, almost all investment firms that are presently exempted only use this exemption for servicing professional clients so the re-notification will be purely administrative. The AFM has made a notification form available.
On 25 July 2018, the new AML regime that partly implements the 4th AML Directive entered into force. As a result, certain further requirements in respect of CDD have to be met by financial institutions under this regime. These include a risk-based approach to CDD that no longer allows a standard simplified CDD in certain circumstances, and new definitions for UBOs and PEPs. This requires financial institutions subject to the AML regime to revisit and – where necessary – change their applicable AML policies and procedures. To assist financial institutions, the AFM has published a new AML guidance. DNB has announced that it will do the same later this year. Finally, according to the new AML regime, sanctions decisions will in principle be published unless this will disproportionately harm the parties concerned or endanger the stability of the financial system.
The regulatory team of Houthoff can be reached at email@example.com or at +31 (0)20 217 2629.