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01 June 2022 Supervision Supervision label Factsheet

In tandem with the Dutch Authority for the Financial Markets (AFM), DNB monitors and enforces compliance with the Financial Supervision Act (Wet op het financieel toezicht – Wft), the Pensions Act (Pensioenwet – Pw), the Mandatory Occupational Pension Scheme Act (Wet verplichte beroepspensioenregeling – Wvb), the Anti-Money Laundering and Anti-Terrorist Financing Act (Wet ter voorkoming van witwassen en financieren van terrorisme – Wwft), the Act on the Supervision of Trust Offices (Wet toezicht trustkantoren – Wtt 2018), the 1977 Sanctions Act (Sanctiewet 1977 – Sw) and all ensuing rules and regulations. DNB has a number of instruments at its disposal to enforce compliance with Dutch supervisory legislation and the related secondary rules and regulations. One of these instruments is an administrative fine.

What is an administrative fine?

An administrative fine is an unconditional obligation to pay a sum of money. It is a penal sanction, imposed with the intention of punishing offenders. Administrative fines may be imposed only for established instances of non-compliance. The General Administrative Law Act (Algemene wet bestuursrecht – Awb) defines the term "non-compliance" as any conduct violating the provisions under or pursuant to any statutory requirement. This conduct may involve both acts and omissions.

DNB's power to impose an administrative fine for an established instance of non-compliance with any of the Acts listed or the ensuing rules or regulations is laid down in:

  • Article 1:80 of the Wft;
  • Article 176 of the Pw;
  • Article 171 of the Wvb;
  • Article 21 of the Wtt 2018;
  • Article 27 of the Wwft, and
  • Article 10d of the Sw.

Pursuant to the Awb, the power to impose an administrative fine for non-compliance lapses five years after the relevant instance.

On whom may an administrative fine be imposed?

A fine may be imposed on the person failing to comply with a statutory requirement (the offender). The Awb defines the term "offender" as the party committing or co-committing an offence, providing that an offending party can be a natural person or a legal entity. DNB is authorised to impose fines not only on non-supervised and supervised institutions but also on natural persons in their capacity as an institution's de facto directors. For a fine to be imposed on a de facto director, it must be established that the institution in question has committed an offence.

More information about the imposition of fines on de facto directors can be found in the Q&As DNB compiled on this topic.

Lastly, DNB may impose a fine on parties co-committing an offence. To ascertain whether the acts of a natural person or legal entity may be regarded as constituting the co-commission of an offence, the case law which has evolved on this topic within criminal law must be considered. An offence is co-committed if one or more natural persons or legal entities jointly violate the law, cooperating closely and deliberately and committing the offence collectively.

Amount of the administrative fine

An instance of non-compliance with financial supervision legislation is in one of three categories, depending on the gravity of the non-compliance. The categories are laid down in:

  • Article 1:81 of the Wft;
  • Article 177 of the Pw;
  • Article 172 of the Wvb;
  • Article 22 of the Wtt 2018;
  • Article 28 of the Wwft, and
  • Article 10d of the Sw.

The financial supervision legislation referred to above and the Decree on Administrative Fines in the Financial Sector (Besluit bestuurlijke boetes financiële sector – Bbbfs) set out how the amount of an administrative fine must be calculated. Offences against the Pw, Wvb and Sw by pension funds1 and occupational pension funds2 are further elaborated in the Decree implementing the Pensions Act and the Mandatory Occupational Pension Scheme Act (Besluit uitvoering Pensioenwet en Wet verplichte beroepspensioenregeling, referred to below as the "Decree").

Category 1 covers minor, mostly frequently occurring offences, such as failure to submit specific reports to DNB by the specified deadlines. This category carries a fixed fine of EUR 10,000.

A flexible system is used for the graver offences included in categories 2 and 3, allowing the imposition of administrative fines proportionate to the gravity and duration of the non-compliance and the degree to which blame can be attributed to the non-compliant party.

  • Category 2 covers offences including failure to meet expertise and integrity requirements.
  • Category 3 covers the gravest offences, including performing activities subject to a licence requirement without a licence.

Each category has a base amount, minimum amount and maximum amount, which are set out in the table below:

The guidance set out in the Decree provides that the base amount for categories 2 and 3 may be adjusted upwards or downwards if the gravity or duration of the non-compliance or the degree to which blame can be attributed to the non-compliant party justifies an increase or decrease. The maximum adjustment in both categories is 50%.

Administrative fines in all categories are doubled for repetition of an offence. A repeated offence is involved if an instance of non-compliance occurs within a period of five years after an administrative fine was imposed on the non-compliant party for the same offence. The supervisory authority must allow for the non-compliant party's financial capacity in calculating the amount of an administrative fine. In the event of financial incapacity, the fine may be reduced by up to 100%.

Procedure

If DNB intends to impose an administrative fine, it notifies the relevant natural person or legal entity of its intention in writing, explaining for what instance of non-compliance the fine may be imposed. A report detailing the established non-compliance is attached to the letter.

The party involved is given the opportunity to state its views orally, in writing, or both. Prior to an oral presentation of views, the person or entity concerned is informed that they are not under a duty to answer. Taking the party's statement of views, if any, into consideration, DNB decides whether or not to impose an administrative fine.

Administrative fines must be paid within six weeks after the decision to impose them takes effect. If an objection or appeal is lodged, the obligation to pay may be suspended until the appeal period has expired or until the appeal has been decided on.

Disclosure

DNB is required by law to disclose decisions to impose an administrative fine once the relevant decision is irrevocable. It also discloses the outcome of any objection or appeal preceding the decision.

In addition, DNB is required to disclose decisions to impose a fine for specific grave instances of non-compliance as soon as practicable after notifying the party involved, i.e. before the fining decision becomes irrevocable. This is referred to as "early disclosure". The grave offences in question are:

  • non-compliance with a statutory provision included in fine category 3, e.g. non-compliance with a prohibition or market access provision;

  • non-compliance with a statutory provision included in fine category 2, if the provision in question has specifically been included in a general order in council.

Administrative fines are not disclosed if disclosure of the decision to impose them would jeopardise the stability of the financial system.

DNB may postpone the disclosure of the decision or disclose it in anonymised form if it establishes beforehand that full disclosure is likely to have any of the following consequences:

  • disclosure of the personal details of the natural person on whom the administrative fine is imposed would be disproportionate to their act of non-compliance;
  • disclosure would cause disproportionate detriment to the parties involved;
  • disclosure would undermine an ongoing criminal investigation, or an examination held by the supervisory authority; or
  • disclosure would jeopardise the stability of the financial system.

Decisions to impose an administrative fine are disclosed at least five business days after the date on which the disclosure decision was notified to the party involved. If, in the course of this waiting period, the court is requested to grant injunctive relief, the disclosure will be suspended until the court in preliminary relief proceedings has passed judgment. Only in urgent cases may DNB disclose an administrative fine immediately without observing the five-day waiting period.

Concurrence of administrative fine and criminal law

For instances of non-compliance constituting an economic offence that is liable to punishment under the Economic Offences Act (Wet op de economische delicten – WED), DNB may impose an administrative fine or the Public Prosecution Service may decide to prosecute.

As no offence may be penalised more than once, DNB, the Fiscal Intelligence and Investigation Service (Fiscale Inlichtingen- en Opsporingsdienst – FIOD) and the Public Prosecution Service engage in tripartite consultations to decide whether an offence is to be penalised under administrative or criminal law. These consultations are based on the Covenant on the avoidance of unlawful concurrence of administrative and criminal-law sanctions (Convenant ter voorkoming van ongeoorloofde samenloop van bestuurlijke en strafrechtelijke sancties, available in Dutch only).

Objection and appeal

Decisions to impose an administrative fine are open to objection within six weeks after the date of their notification (objections may be lodged online or by ordinary post). If an objection is lodged, DNB will review its decision.

Dismissed objections are appealable before the Rotterdam District Court. Rulings of the Rotterdam District Court are appealable before the Trade and Industry Appeals Tribunal (College van Beroep voor het bedrijfsleven – CBb).

As a rule, fining decision effects are suspended for the duration of the objection and appeal proceedings, i.e. fines need not be paid until the fining decision becomes irrevocable.

[1] pension funds as defined in Article 1 of the Pensions Act (Pensioenwet – Pw).
[2] occupational pension funds as defined in Article 1 of the Mandatory Occupational Pension Scheme Act (Wet verplichte beroepspensioenregeling – Wvb).
[3] For the performance of binding EU legal acts, this maximum may be set at up to EUR 2,500,000.
[4] For the performance of binding EU legal acts, it may be stipulated by general order in council that specific offences carrying a category 2 fine are liable to a fine of up to 5% of the net turnover for the preceding financial year if that sum should exceed twice the applicable maximum amounts specified above.
[5] For the performance of binding EU legal acts, this maximum may be set at up to EUR 10 million, EUR 15 million or EUR 20 million. In that event, the base amount is set at half the maximum amount for the offence in question.
[6] The maximum administrative fine for offences carrying a category 3 fine is equal to 10% of the net turnover for the preceding year. For the performance of binding EU legal acts, this percentage may be increased to 15% by general order in council.
[7] For Wft purposes, the amount of the administrative fine is capped at three times the amount of the gain that the non-compliant institution obtained on account of its non-compliance. For Wtt purposes, the amount of the administrative fine is capped at twice the amount of the gain that the non-compliant institution obtained on account of its non-compliance.
[8] For Pw, Wtt, Wwft and Sw purposes, the amount of the administrative fine is capped at twice the amount of the gain that the non-compliant institution obtained on account of its non-compliance if this gain exceeds €2 million.
[9] If the fine is imposed on the basis of the Wwft, the maximum in certain cases (referred to in the Wwft) is no more than 20% of the net turnover in the previous year, if this is more than twice the applicable maximum amount.