DNB did not consider two directors of internet broker DeGiro to be trustworthy. The regulator therefore wanted to censure them for policy-making positions in the financial sector. They also had to sell certain shares. After years of proceedings, the court has now drawn a line under that decision.
DNB is a prudential regulator and focuses on the solid and honest financial companies that meet their obligations. AFM is responsible for conduct-of-business supervision and advocates fair and transparent financial markets. From these two different perspectives, DNB and AFM work closely together in reviews of executive and supervisory directors. In suitability and reliability assessments for executive and supervisory directors of banks and insurers, DNB is legally obliged to seek advice from the AFM.
The Financial Supervision Act (Wft) describes supervision. The Dutch Central Bank (DNB) and the Financial Markets Authority (AFM) carry out the supervision. This gives these institution enormous freedom and independence which (can) cause sloppy mistakes and poor observance.
Every year, DNB tests nationwide 1,200 to 2,000 directors for suitability, reputation and reliability. This is almost always prior to their assigned promotion, but five to ten times a year there are so-called reassessments of incumbent directors. Here is where they re-check of the suitors are still qualified for the positions; they have been promoted to.
Disapproval is de facto a professional ban and is all the more sensitive if someone has been active in the financial sector for years. Supervisors test new directors beforehand, and may also do so in the interim, if warranted. Over the years, a string of directors in the financial sector have been cut down on a negative judgement. The supervisors not only look at integrity, but also check whether directors are suitable for their position based on education and experience. With a stake of more than 10%, shareholders of financial institutions must also meet this integrity requirement.
DNB has suffered a sensitive defeat in a case against two former directors of internet broker DeGiro. The central bank found the duo not reliable, based on their long-running file with fellow regulator AFM, and wanted to censure them for policy-making positions in the financial sector. There was allegedly much wrong in its compliance with financial legislation on segregation of customer assets and anti-money laundering. This eventually led to an order under penalty (conditional fine) for DeGiro, with the AFM demanding a list of improvements. If they didn’t comply to these demands, there could be more serious consequences. Supervisors did not only look at integrity, but also tested whether directors are suitable for their positions based on education and experience in the field.
The judge in this case made it clear how to deal with past oversight issues in an integrity reassessment, these should not just be listed with the same weighting.
The court nullifies DNB’s earlier decision and, in addition, takes much of the evidence off the table. Six facts presented by DNB had to be dropped and should not be used to establish unreliability.
DNB & bunq
The DNB have suffered a sensitive defeat before. Such as when the DNB had taken the fairly new bank bunq to court, for not accurately reviewing the Prevention of Money Laundering and Terrorist Financing Act (Wwft) legislation. DNB found that bunq supposedly does not gather enough specific information about the customer using this method to properly assess money laundering risks. DNB conducted an investigation at bunq in November 2018. DNB found that bunq breached rules of the Decree on Prudential Rules Wft (Bpr) and Wwft on essential points. Just like in the bunq case, the DNB have mistreated the anti-money laundering regulations and did not apply in-depth but general research. They had (in the bunq case) taken into account wrong regulations and had not investigated the facts and circumstances carefully and thoroughly enough. They performed a general review, as here, without looking further into the details of the situation. Which caused people to suffer from the DNB’s carelessness. Whilst later it turned out that the DNB’s review was not entirely thorough and accurate.
Consequences for you
This carelessness is not only negative in the financial sense for the persons concerned, but creates a lifetime mark on your record. Which makes finding a job again almost to impossible.
You suddenly receive a letter – it shows that someone wants to take legal action against you. But what exactly is it and what should you do now?
ACG International can help
Winning legal proceedings is closely linked to excellent knowledge and experience of civil procedural law. Our team consists of highly experienced litigation lawyers who have years of experience with various procedures (general procedures at the courts and tribunals, but also procedures at the Enterprise Chamber) and, for special procedures, also closely cooperate with super-specialised litigation lawyers (e.g. financial law).
Our Managing Partner, Edith Nordmann, who has over twenty years of work experience, has even talked about this subject in Dubai. She discussed the inadvertence of the DNB while monitoring institutions. So, at ACG International you’re in great hands.
If you have questions on what to do in this or similar situation and avoid negative consequences of the law, contact ACG International. We offer a fast and individualized consultation with our specialists to discuss your issue and possible solutions. Book your free 15-minute consultation. We can be reached via info@acginter.com or by telephone via 020-800 64 00.
