Recent publications on AMLD, crypto-assets and insurers

News Update Financial Regulatory

Recent publications on AMLD, crypto-assets and insurers
1 december 2022

In this News Update, we discuss the judgment of the Court of Justice of the EU on the AMLD provision on UBOS; DNB's study on the evolution of crypto-assets and the regulatory response; DNB's study on insurers in a changing world; and EIOPA's staff paper comparing recovery and resolution frameworks for banks and insurers. We further highlight some other financial regulatory publications issued since our last News Update.

Court of Justice of the EU | Judgment on AMLD provision on accessibility of information on UBOs

In its judgment of 22 November 2022 the Court of Justice of the EU ("the Court") ruled that a particular provision of the Anti-Money Laundering Directive (AMLD) was invalid. The provision in question requires Member States to ensure that the information on the beneficial ownership of corporate and other legal entities incorporated within their territory is accessible in all cases to any member of the general public. According to the Court, the current accessibility of the information constitutes a serious interference with the fundamental rights enshrined in Articles 7 and 8 of the Charter of Fundamental Rights of the European Union, i.e. the right to respect for private life and the right to the protection of personal data, respectively. This is because the information disclosed enables a potentially unlimited number of persons to find out about the material and financial situation of a beneficial owner. Furthermore, the potential consequences for the data subjects resulting from possible abuse of their personal data are exacerbated by the fact that, once those data have been made available to the general public, they cannot only be freely consulted, but also retained and disseminated.

Following this judgment, the Dutch Minister of Finance informed the House of Representatives (only in Dutch) that, although the Dutch situation was not entirely parallel with that of Luxembourg, regarding which questions had been referred for a preliminary ruling, the judgment gave reason to look at the provision of information on Ultimate Beneficial Owners (UBOs). The minister had therefore asked the Chamber of Commerce to temporarily stop providing information from the register from 22 November 2022 pending more detailed analysis of the judgment with all stakeholders and consultation with the European Commission to see what information provision was possible, partly in the light of supervision. The minister stressed that the judgment did not affect the obligation for legal entities to register UBOs; this obligation therefore remains in force.

DNB | Evolution of crypto-assets and the regulatory response

In its Occasional Study 'Crypto-assets: evolution and policy response', the Dutch Central Bank (De Nederlandsche Bank, DNB) notes that crypto-assets have shown a remarkable market evolution in recent years, which implies that the opportunities and risks are evolving as well. This affects DNB's tasks and objectives as an integrated central bank and supervisory authority.

The study aims to: (i) deepen DNB's understanding of the functioning of crypto-assets and their attractiveness; (ii) revisit their main opportunities and risks, and (iii) summarise DNB's views on ongoing efforts regarding regulation, supervision and enforcement. The study starts by introducing crypto-assets, explaining who invests in them and how markets have evolved. Further, it revisits the main opportunities and risks of the technology, unbacked crypto-assets, stablecoins and the monetary implications, including the differences between crypto-assets and central bank digital currency. The study goes on to analyse why and how crypto-assets should be regulated. DNB's main findings and conclusions are as follows:

  • the future path of innovation driven by the underlying technology is uncertain, which calls for continuous monitoring;
  • unbacked crypto-assets are not suitable as money, and mainly serve as a speculative investment;
  • stablecoins may have the potential to function as a means of payment for specific use cases, but only if risks are adequately mitigated;
  • market participants must adhere to relevant existing requirements and prepare for forthcoming requirements;
  • forthcoming regulatory changes continue to affect the objectives and tasks of DNB as an integrated central bank and supervisory authority.

DNB | Insurers in a changing world

On 16 November 2022, DNB published its study 'Insurers in a changing world' (Verzekeraars in een veranderende wereld, only in Dutch), on the role of the insurance sector in the Dutch economy. DNB notes that the Netherlands has a relatively saturated insurance market with stiff competition, partly due to the presence of foreign insurers and tech companies. Consequently, attention must be paid to ensuring risk solidarity between policyholders and a level playing field between insurers. DNB considers it important in this respect that insurers proactively respond to new opportunities. People in the Netherlands currently have limited insurance coverage against new and changing risks, such as flood and cyber risks. According to DNB, a broad approach is needed to increase resilience to such risks, with insurers and the government working together to achieve better insurance coverage in these areas. DNB considers it important that insurers properly manage the underwriting risks of flood and cyber coverage, and intends to monitor this as part of its regulatory role.

Key recommendations in DNB's study are that:

  • DNB expects insurers to remain alert to the effects of inflation and interest rate developments and, where necessary, to adjust their policies to mitigate any associated negative effects on their financial position as much as possible;
  • further harmonisation of laws and regulations and their uniform enforcement by national regulators are important preconditions to ensure a level playing field between insurers;
  • insurers, policymakers and regulators should be mindful of the potentially negative effects of far-reaching risk selection on risk solidarity among policyholders;
  • responding to new and changing risks offers insurers opportunities to strengthen the future-proofing of their earnings model and continue to fulfil their role in society;
  • government and insurers have a shared responsibility to raise society's awareness of the cyber and flood risks to which it is exposed;
  • better disclosure of data on and a shared taxonomy of cyber incidents is a prerequisite for further growth of the cyber insurance market; and
  • insurers should properly manage the underwriting risks of cyber and flood coverage.

EIOPA | Comparison of recovery and resolution frameworks for banks and insurers

On 10 November 2022, the European Insurance and Occupational Pensions Authority (EIOPA) published a staff paper providing a comparative analysis of the Insurance Recovery and Resolution Directive (IRRD) and the Bank Recovery and Resolution Directive (BRRD), to identify similarities and differences between the two directive texts with the aim of understanding the rationale behind them.

EIOPA concludes that there are indeed some common elements in the IRRD and the BRRD, reflecting the fact that both directives are inspired by similar international standards, both from the International Association of Insurance Supervisors and the Financial Stability Board and that, to a certain extent, the general resolution framework does not need to differ considerably. Where there are significant similarities, EIOPA is of the view that these are warranted to the extent that they concern areas without the need for sector-specificities (e.g. cross-border resolution and penalties). EIOPA considers consistency with the banking framework desirable where this does not undermine the sectors’ specific features. On the other hand, fundamental elements of recovery and resolution, such as resolution tools and preparation, include relevant differences reflecting insurance-specific elements. Further nuances addressing the differences between the banking and the insurance sector can be found in many other areas, including resolution conditions and resolution powers. EIOPA believes that the IRRD appears less demanding than the BRRD. Furthermore, EIOPA is of the opinion that the IRRD gives proper consideration to the differences in the business model of insurers and the way they exert risks.

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 November 2022 News Update.

Ministry of Finance
  • Implementing Act for Regulation on Recovery and Resolution of Central Counterparties (Uitvoeringswet verordening herstel en afwikkeling centrale tegenpartijen, only in Dutch)
    entered into force on 4 November 2022;
  • Consultation on Banking Data Referral Portal Amendment Decree (Wijzigingsbesluit verwijzingsportaal bankgegevens, only in Dutch);
  • Consultation on Amendment Regulation on Final Attainment Levels and Test Terms for Financial Services Exams Financial Supervision Act 2023 (Wijzigingsregeling eindtermen en toetstermen examens financiële dienstverlening Wft 2023, only in Dutch).

Dutch Authority for the Financial Markets (AFM)
  • Trend monitor 2023 (Trendzicht 2023, only in Dutch);
  • Sustainable investors mapped out – Survey of sustainable retail investors' goals and expectations (Duurzame beleggers in kaart – Onderzoek naar doelstellingen en verwachtingen van duurzame retailbeleggers, only in Dutch);
  • Report on the state of the capital markets 2022;
  • Report 'SFDR in practice: continued attention needed' (SFDR in de praktijk: blijvende aandacht nodig, only in Dutch);
  • Report on market impressions 2022 (Marktindrukken 2022, only in Dutch);
  • Occasional paper 'Maximum mortgage borrowing?'Maximaal lenen voor de hypotheek? only in Dutch);
  • Report 'Buy now, pay later' (only in Dutch).

  • DNB Analysis - Lessons from the 1970s and 1980s for the Dutch banking sector (Lessen uit de jaren zeventig en tachtig voor de Nederlandse bankensector, only in Dutch);
  • Supervision in view (Toezicht in beeld, only in Dutch);
  • Amendment to Regulation on statements of financial enterprises Financial Supervision Act 2011 (Wijziging Regeling staten financiële ondernemingen Wft 2011, only in Dutch);
  • Amendment to Regulation on prudential supervision of limited-risk insurers (Wijziging Regeling prudentieel toezicht verzekeraars met beperkte risico-omvang, only in Dutch);
  • Working Paper 'What drives trust in the financial sector supervisor? New empirical evidence';
  • News release (only in Dutch) on scope of the reporting obligation under the Sanctions Act (Sanctiewet).

European Central Bank
  • Walking the talk – Banks gearing up to manage risks from climate change and environmental degradation;
  • Good practices for climate-related and environmental risk management.

European Supervisory Authorities

European Banking Authority
  • Report on the application of the Infrastructure Supporting Factor;
  • Opinion on the set-up and operationalisation of Intermediate EU Parent Undertaking(s);
  • Final draft Regulatory Technical Standards on specific liquidity measurement for investment firms;
  • Consultation Paper on Guidelines amending Guidelines on improving resolvability for institutions and resolution authorities;
  • Guidelines on the use of Remote Customer Onboarding Solutions.

  • Staff paper – Proposal for an Insurance Recovery and Resolution Directive: Frequently asked questions;
  • Discussion Paper on Methodological principles of insurance stress testing – Cyber component.

European Securities and Markets Authority

Single Resolution Board
  • Minimum requirement for own funds and eligible liabilities (MREL) dashboard for the second quarter of 2022;
  • SRB Work Programme 2023.

European Systemic Risk Board
  • ASC Insight on bank capital regulation and climate change.

Basel Committee on Banking Supervision
  • Newsletter on bank exposures to non-bank financial intermediaries.

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

Advocaat | Partner