Financial law is often complex. Especially for companies with an innovative business model it can be challenging to determine exactly what obligations they have to meet.
We have broad experience in advising different types of financial undertakings, for example on questions relating to market access, applications for a license or exemption, business operations (drafting internal policies and procedures) and ongoing information and reporting obligations. Our clients are both FinTechs and growth companies, as well as established companies.
The members of this team all started their career at top tier law firms where they specialized in financial laws and regulations. In addition, they have experience as in-house legal counsel, both at established financial undertakings as well as at growing FinTechs.
We know what is required to maneuver quickly and efficiently through financial regulations and how to provide clarity both to our clients and their customers through understandable and pragmatic advice.
In recent years there have been many developments in the field of payment methods. The entry into force of PSD 2 (the European Payment Services Directive) in 2019 has opened the doors for FinTechs offering new (online) payment and account services, such as innovative payment apps and payment systems. PSD 2 has also ensured that many online platforms fall within the scope of PSD 2. We find these developments in the field of payment services very interesting and like to take a constructive approach in finding legal possibilities for these developments.
The provision of so-called ‘payment services’ by these parties often requires a licence and ‘declaration of no objection’ (DNO) from the Dutch Central Bank (DNB), unless an exemption can be relied upon. In addition, certain conditions relating to the (co-)policymakers, business operations, governance and ongoing information and reporting obligations apply, on which we are happy to advise.
Investment services and activities
There have been many interesting developments in the field of investment services (including asset management, investment advice and execution-only) in recent years. Several new players have appeared on the market who have introduced innovative investment services and, for example, made asset management more accessible to a wider audience.
The provision of investment services and activities requires a licence from the Netherlands Authority for the Financial Markets (AFM) and a ‘declaration of no objection’ (DNO) from the Dutch Central Bank (DNB). In addition, certain conditions relating to the (co-)policymakers, business operations, governance and ongoing information and reporting obligations apply, on which we are happy to advise.
Dealing with cryptocurrencies falls under different (mainly financial) laws and regulations. The issuance of cryptocurrencies by means of an Initial Coin Offering (ICOs) may, depending on the type of coin or token (native, utility, payment or security token – or a combination thereof), fall under the rules regarding the issuance of securities or electronic money. Anti-money laundering rules will also have to be observed. We have extensive experience in issuing various types of tokens and with different forms of financing.
Parties who offer wallets and fiat-crypto exchanges fall within scope of the European anti-money laundering legislation (due to an amendment of the fourth Anti-Money Laundering Directive). As a result, providers of wallets and exchanges will have to register with the Dutch Central Bank (DNB) and comply with certain rules on an ongoing basis. We are happy to help with this registration and to help identify how providers can comply with these rules and how cryptocurrencies relate to these rules, for example using blockchain analysis tools such as Chainalysis or Elliptic.
Blockchain is of course more than just cryptocurrencies. It is likely that we have only seen a fraction of the possibilities that blockchain could offer. These include zero trust supply chain solutions, self-sovereign identity for stateless persons, a decentralized internet and the facilitation of a balanced ‘smart’ energy grid on which every energy consumer is also a producer. We understand the complex characteristics of blockchain and blockchain applications and how they relate to laws that did not yet take this technology into account.
Crowdfunding is seen as an important alternative to regular financing by, for example, banks. In 2019, 424 million euros was raised through crowdfunding in the Netherlands alone. Certain forms of crowdfunding, for example by means of loans or the issuance of shares or bonds, are regulated and fall under the supervision of the Netherlands Authority for the Financial Markets (AFM). These crowdfunding platforms will have to apply for a licence or exemption and will have to comply with various regulations on an ongoing basis. We recommend involving these regulations at an early stage when choosing for a specific type of crowdfunding, as the extent to which different types of crowdfunding are regulated may differ considerably. We are happy to explain this and can assist with an application procedure with the AFM.
Anti-money laundering regulations
In addition to rules regarding licensing and ongoing compliance, financial undertakings have to comply with European anti-money laundering legislation (the fourth and fifth Anti-Money Laundering Directive). In the Netherlands, these rules are laid down in the Act on the prevention of money laundering and financing of terrorism (Wwft) and the Sanctions Act. The Wwft does not only apply to licensed financial undertakings, but also to, for example, real estate agents, art dealers and providers of wallets and fiat-crypto exchanges. The Wwft obliges these parties, among other things, to perform client due diligence (CDD), monitor and in some cases report transactions of their clients and periodically train their staff on the Wwft.
We have vast experience in the field of the Wwft and can assist not only in explaining these rules, but also in implementing them in the business operations. We tailor our advice to the type of company and sector in which our client operates and make the necessary procedures as comprehensible and practical as possible, for example by using visuals with clear step-by-step plans. We also regularly provide Wwft training courses.
Parties who are involved in the collective investments for multiple investors and who are active in or from the Netherlands are likely to fall under the Dutch laws and regulations relating to (managers of) investment funds (the Dutch implementation of the European Directive on Alternative Investment Fund Managers or ‘AIFMD’). We advise various types of fund managers on, for example, registrations for the ‘small managers’ regime, licence applications, applications for an EuVECA (for venture capital) or EuSEF (for social entrepreneurs) label or a ‘declaration of no objection’ (DNO) and other questions on ongoing obligations (such as information and reporting obligations, PRIIPs and remuneration policies).
Apart from certain exceptions, it is prohibited in the Netherlands to lend money to consumers without having obtained a licence from the Netherlands Authority for the Financial Markets (AFM). Advice and intermediation with respect to such consumer loans are also regulated. In addition to applying for a licence or an exemption, information requirements apply to prevent excessive lending. These rules on so-called ‘consumer or mortgage credit’ are not only relevant for banks and other credit providers, but also for crowdfunding platforms, financial leasing, companies that grant loans to employees in the context of, for example, employee participation, comparison sites and parties that offer products or services for which a loan is entered into (e.g. cars or energy-saving measures). We can help identify what rules apply.
Offering of securities (prospectus requirements)
The offering of securities (e.g. shares, bonds and membership interests in funds) is subject to certain conditions, unless an exemption applies. These rules can play a role at different times throughout a company’s lifetime, for example in case of an IPO, ICO, crowdfunding or when shares or Stock Appreciation Rights (SARs) are offered to employees as part of an employee participation plan. In such cases it may be required to publish an (approved) prospectus. We are happy to advise on these obligations and any available exemptions.