News Update Financial Regulatory

Bill on Money Laundering Action Plan submitted to House of Representatives
7 November 2022

In this News Update, we discuss the Bill on the Money Laundering Action Plan, which has been submitted to the House of Representatives; the AFM's consultation on the amendment to the Further Regulations on the Supervision of the Conduct of Financial Undertakings (Financial Supervision Act); and DNB's analysis on the feasibility and affordability of an insurance guarantee scheme in the Netherlands. We further highlight some other financial regulatory publications issued since our last News Update.

Bill on Money Laundering Action Plan submitted to House of Representatives

On 20 October 2022, the Bill on the Money Laundering Action Plan (Wetsvoorstel plan van aanpak witwassen) and an accompanying explanatory memorandum (both only in Dutch) were submitted to the House of Representatives. The Bill amends the Act on the Prevention of Money Laundering and Terrorist Financing (Wet ter voorkoming van witwassen en financieren van terrorisme, "Wwft") and consists of four elements:

  • prohibiting professional or commercial traders in goods to carry out transactions above EUR 3,000 in cash;
  • enabling data sharing between institutions belonging to the same category in the context of customer due diligence when there is a higher risk of money laundering or terrorist financing;
  • enabling banks to jointly monitor transactions;
  • clarifying the use of special categories of personal data and of personal data of a criminal nature in the context of Wwft obligations, to prevent money laundering and terrorist financing.

After the Bill is considered and accepted by both the House of Representatives and the Senate, it will enter into force at a time to be determined by royal decree.

AFM | Consultation on amendment to Further Regulations on the Supervision of the Conduct of Financial Undertakings (Financial Supervision Act)

On 12 October 2022, the Dutch Authority for the Financial Markets ("AFM") published the consultation document (only in Dutch) on amending the Further Regulations on the Supervision of the Conduct of Financial Undertakings (Financial Supervision Act) (Nadere regeling gedragstoezicht financiële ondernemingen Wft). The amendments relate to changes to the Decree on Conduct of Business Supervision of Financial Undertakings (Financial Supervision Act) (Besluit Gedragstoezicht financiële ondernemingen Wft). The reasons for the amendments are as follows:

  • From 1 January 2023, Regulation (EU) No 1286/2014 on key information documents for packaged retail and insurance-based investment products (the "PRIIPs Regulation") will also apply to collective investment schemes and Undertakings for the Collective Investment in Transferable Securities ("UCITS"). The Decree on Conduct of Business Supervision of Financial Undertakings (Financial Supervision Act) has been amended accordingly. Until 31 December 2022, UCITS and collective investment schemes are required to prepare 'key investor information' under Directive 2009/65/EC (the "UCITS Directive"). From 1 January 2023, UCITS and collective investment schemes sold to retail investors will have to draw up a 'key information document' under the PRIIPs Regulation. Incidentally, the UCITS Directive 'key investor information' will not disappear completely. When a fund manager offers units to professional managers, the manager can choose between providing the 'key investor information' or providing a PRIIPs 'key information document'.
  • The service document that financial service providers are required to provide to consumers for information will be replaced by a comparison chart, which must comply with certain rules.
  • A 'segregated assets account' has been introduced.
  • Some technical adjustments are necessary.

The consultation period ends on 9 November 2022.

DNB | Analysis on the feasibility and affordability of an insurance guarantee scheme in the Netherlands

In January 2019, the Act on the Recovery and Resolution of Insurers (Wet herstel en afwikkeling van verzekeraars) came into effect, which seeks to improve policyholder protection if an insurer gets into difficulties. Nevertheless, policyholders may still face pay-out curtailments. Unlike some neighbouring countries, the Netherlands does not have a guarantee system to prevent this from happening. Schemes are in place that protect deposits (deposit guarantee scheme) and investments (investor compensation scheme). An insurance guarantee scheme ("IGS") can support the continuity and/or value of insurance policies. An IGS is sector-funded and can be used to cap curtailments imposed on a failing insurer’s policyholders.

Emphasising that (i) the question whether an IGS should be introduced in the Netherlands is a political one, and that (ii) the Minister of Finance has announced that discussions are to start with stakeholders on the desirability and feasibility of an IGS in the Netherlands, the Dutch Central Bank (De Nederlandsche Bank, "DNB") published its Analysis on the feasibility and affordability of an insurance guarantee scheme in the Netherlands. DNB believes specific IGS designs are conceivable that offer policyholders affordable additional protection. It states that such an IGS could have the following design features:

  • all three functions of an IGS, matching the different ways in which an insurer can be wound up in resolution or bankruptcy: (i) contributing to the funding of a sale or an independent relaunch, (ii) annual supplements to pay-outs during run-off, and (iii) compensation in the event of liquidation;
  • broad coverage: life insurance (including pension insurance), income protection insurance and funeral insurance, adopting a home approach;
  • a relative excess for policyholders, e.g. 5% of the policy value;
  • both ex-ante and ex-post funding based on a risk-weighted sector levy.

Other financial regulatory publications

We have highlighted a selection of other publications by legislatures and regulators for the financial markets and financial supervision since our October 2022 News Update.

Ministry of Finance
  • Consultation on the Implementation Act for the Sixth Motor Insurance Directive (Implementatiewet zesde richtlijn motorrijtuigenverzekering, only in Dutch).

DNB
  • Consultation on Guide to climate and environmental risk management (Gids voor de beheersing van klimaat en milieurisico’s, only in Dutch);
  • Consultation document Draft policy rule on resolvability of insurers (Beleidsregel Afwikkelbaarheid Verzekeraars, only in Dutch);
  • Regulation extending risk weighting mortgage loans 2022 (Regeling verlenging risicoweging hypothecaire leningen 2022, only in Dutch), which was published in the Government Gazette (Staatscourant) and enters into force on 1 December 2022;
  • News item (only in Dutch) on the impact of rising interest rates on insurers;
  • News item on transactions with a non-EU registered crypto service provider.

European Banking Authority
  • Updated report on the monitoring of TLAC-/MREL-eligible liabilities instruments of EU Institutions;
  • Thematic note on residential real estate exposures of EU banks – risks and mitigants;
  • Opinion of the European Banking Authority on the European Commission’s proposed amendments to the final draft implementing technical standards on prudential disclosures on ESG risks;
  • Report on the peer review on ICT risk assessment under the SREP;
  • Final Guidelines and two final draft Regulatory Technical Standards ("RTS") (RTS1 and RTS2) specifying technical aspects of the revised framework capturing interest rate risks for banking book positions;
  • Report on incorporating ESG risks in the supervision of investment firms;
  • 2023 European Supervisory Examination Programme for prudential supervisors;
  • 2023 European Resolution Examination Programme for resolution authorities.

European Insurance and Occupational Pensions Authority
  • Methodology for assessing value for money in the unit-linked market;
  • Warning to insurers and banks on Credit Protection Insurance products;
  • Follow-up report to the peer review on the propriety assessment of administrative, management and supervisory body members and qualifying shareholders.

European Securities and Markets Authority
European Commission
  • Report on the functioning of the Securitisation Regulation.

European Council

If you have any financial regulatory questions, please do not hesitate to contact Berry van Wijk and Roel Theissen. For questions related to Investment Management, you can also contact our colleagues Oscar van Angeren and Marthe Bollen.

Written by:
Berry van Wijk

Key Contact

Rotterdam
Advocaat | Partner
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