Various regulations issued by the EU are supervising the activity of banks and other financial companies operating in the Netherlands. The main documents supervising these activities are the Dutch Financial Supervision Act ratified in 2007 and the EU’s Market in Financial Instruments Directive from 2007.
The investment funds, asset and fund managers, dealers, brokers, insurers and all the entities operating in the financial markets are supervised by the Dutch Financial Supervision Act.
However, the above document doesn’t contain information regarding the supervision of trust offices and audit firms and the Act on the prevention of money laundering and finance of terrorism is also separated from the above.
There are two types of supervision granted by the Dutch Financial Supervision Act: prudential supervision and market conduct supervision.
• Prudential supervision (conducted by the Dutch Central Bank) is mainly focused on the financial character of the parties involved in the financial markets.
• Market conduct supervision (mainly ruled by the Netherlands Authority for the Financial Markets) is focused on the relations between the parties involved on the financial market and the treatment of customers and is trying to ensure a transparent financial market.
The banks in Netherlands are financial institutions that obtain repayable funds from individuals or corporate bodies or give loans to these parties in order to conduct business. The Dutch banks must obtain a license granted by the DCB (Dutch Central Banks) except the ones already licensed by the supervisory authority of one of the EU Member States and operating as branches.
A Dutch investment fund is a company especially established for investments which asks or obtains monies or other assets for a collective investment and has as a result sharing the gains among its members. The AFM must authorize the manager of the fund or the fund itself to offer a unit or participation right .The investment funds also requires a license before starting to operate.
Other provisions of the FSA are referring to the Undertakings for Collective Investments in Transferable Securities which are licensed in a Member State of the European Union and can offer their participation rights in Holland but only after announcing the AFM. The participation rights can be offered in two ways: cross-border or via a Netherlands branch. Also the UCITS not having the registered seat in an EU country member but in a country who has signed a treaty with the Netherlands can offer its participation rights after notifying AFM and delivering a certificate of supervised status from the authorized supervising authority from that country. All the details regarding UCITS are kept in a register by the Authority for the financial Markets.
General rules of licensing. A prospectus needs to be approved by the AFM to the financial institutions if that entity wants to offer securities to the public in the Netherlands.
All the Issuing Companies based in Netherlands are supervised by AFM even if the securities offered by it are not traded here.
Other regulations state that all the Issuing Companies and the related service providers must obtain a license for providing such services in or from the Netherlands. Several tests must be passed by the entity in order to obtain the license.
The companies based in a country member of EU and having a license to offer their services in another Member State must announce the AFM about the intention to offer services in the Netherlands.
Other activities requiring a license are the securities exchanges, license granted by the Ministry of Finance.
An EU directive, the Market Abuse Directive, is considered part of the FSA and its applicability is supervised by the AFM and the Public Prosecution Service. According to it, the transactions in or from the Netherlands involving listed securities is not allowed.
The FSA states that no decision maker or co-decision maker can be issued without being checked on trustworthiness and expertise by these authorities: the DCB and the AFM. If the trustworthiness has been verified by one supervisory authority it does not have to be verified again if the decision maker or co-decision maker changes his position, except the decisions that put his trustworthiness in doubt.