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21 December 2011 Supervision Supervision label Factsheet

The Financial Supervision Act (Wet op het financieel toezicht) provides that it is not permitted to operate as a bank or electronic money institution without having obtained authorisation. In addition, the Act provides for a prohibition against inviting repayable funds.

Scope of the prohibition in Section 3:5(1) of the Wft

The prohibition to invite repayable funds does not apply to

  • banks holding a licence issued by DNB or operating in the Netherlands on the basis of a licence issued by the competent authority in another Member State (Section 3:5(2), under a and b, of the Wft)
  • the Member States and the regional and local public authorities of the Member States (Section 3:5(2), under c, of the Wft)
  • those who have obtained repayable funds as a result of offering securities (bonds and other debt certificates) in accordance with the provisions in the Part on conduct supervision of financial markets of the Wft, and
  • special purpose reinsurance vehicles.

In addition, the prohibition does not apply to those who have been exempted under the Exemption Regulation under the Wft (Vrijstellingsregeling Wft) or to those who have been granted dispensation by DNB under Section 3:5(4) of the Wft. We may grant dispensation if the applicant demonstrates that the interests which the prohibition aims to protect are sufficiently safeguarded.

The prohibition is based on Article 9(1) of the Capital Requirements Directive IV (Directive 2013/36/EU), which stipulates that “Member States shall prohibit persons or undertakings that are not credit institutions from carrying out the business of taking deposits or other repayable funds from the public”.

Definition of 'repayable funds'

Section 1:1 of the Wft defines "repayable funds" as funds that must be repaid at a certain point in time, for any reason whatsoever, and of which it is clear in advance what nominal amount must be repaid. This includes deposits and other repayable funds.

Funds are considered repayable if it is clear in advance what amount must be repaid. Both the nominal amount and the fact that it must be repaid must be established.

Categories of funds not considered repayable funds

According to the Explanatory Memorandum to the Wft the following categories of funds must not be considered repayable funds:

  1. Paper vouchers and casino chips
  2. Funds payable as a result of obligations to cancel or pay compensation which are still subject to legal proceedings or which have not been ascertained at law
  3. Deposits guaranteeing any present or future obligation to a creditor as collateral for the loan or rental of property, unless the deposit is disproportionate to the actual potential obligations
  4. Advance payments on specific purchase transactions
  5. Postponement of payment for specific purchase transactions
  6. Guaranteed return of deposits by way of a guarantee or insurance from a supervised financial undertaking, if the purpose of the guaranteed return is to cover possible exchange risks
  7. Funds provided as part of a specific order for the onward payment to a third party, unless the link to the specific transaction or order no longer exists, – including through deposit with a third party, assignment for factoring or because the funds for onward payment remain with the third party for longer than technically and organisationally necessary. A third party retaining funds for onward payment as referred to above may assume to have retained the funds no longer than necessary from a technical/administrative perspective if the transfer period between the provision of the funds by the sender and the reception by the beneficiary does not exceed five calendar days. [1]

The applicability of the prohibition on onward payments and on specific categories of institutions

  • Onward payments and the prohibition under Section 3:5 of the Wft
  • Collection agencies and the prohibition under Section 3:5 of the Wft
  • Personal injury firms and the prohibition under Section 3:5 of the Wft
  • Childminding agencies and the prohibition under Section 3:5 of the Wft

Scope assessment

If you need to know whether the prohibition to invite deposits and other repayable funds also applies to your current or proposed activities, you can submit a request for a scope assessment. Please provide a substantiated legal analysis of your current or proposed activities. Your conclusion must be based on the Financial Supervision Act (Wet op het financieel toezicht – Wft). Send your analysis to our Expert Centre on Market Access at markttoegang@dnb.nl. As a rule, we will respond within four weeks, but we may need some more time to assess complex cases.

[1] See the (first) Memorandum of Alterations of the Wft, Parliamentary papers II 2004/05, p. 229-230 (in Dutch only).

Sector(s)

  • Clearing & Settlement Systems
  • Clearing institutions
  • Insurers
  • Investment firms
  • Payment institutions
  • Pension funds
  • Premium Pension institutions
  • Trust offices