DNB, together with the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten – AFM), is responsible for supervising compliance with the Financial Supervision Act (Wet op het financieel toezicht) and the related secondary legislation. To be able to exercise effective supervision, DNB is empowered to penalise breaches of the provisions of the Act. The sanctions that DNB can impose include the administrative fine and the cease and desist order. Another measure at DNB’s disposal is the issuance of a public warning.
What is an administrative fine?
An administrative fine is an unconditional obligation to pay a sum of money. It is a punitive sanction and is imposed with the intention of penalising the offender.
The Act and the Decree on Administrative Fines in the Financial Sector (Besluit bestuurlijke boetes financiële sector) set out how the amount of an administrative fine must be calculated. First, all provisions whose breach is punishable with an administrative fine are classified into three categories, depending on the gravity of the offence. The lowest category carries a fixed fine of € 10,000. For the graver offences included in the second and third categories, a flexible system is used. For the second category, the basic amount is € 500,000 and the maximum amount € 1,000,000. For the third category, the basic amount is € 2,000,000 and the maximum amount € 4,000,000. The minimum amount of the fine is € 0. The supervisory authority may set the amount of the fine anywhere between these lower and upper limits, making due allowance for the specifics of the case and, where categories 2 and 3 are concerned, for the gravity and duration of the offence and the degree to which blame can be attributed. In all cases, the offender’s ability to pay is also allowed for. If, within a period of five years, the offender repeats the offence, the amount of the fine is doubled. Irrespective of this method of setting the amount of the fine, the supervisory authority may also opt to set the amount of the fine at no more than twice the amount of the benefit gained by the offender from the offence, if such benefit exceeds € 2,000,000.
Scope of the administrative fine
DNB can impose an administrative fine on any person who breaches the provisions listed in the Annex to the Financial Supervision Act (Wet op het financieel toezicht). DNB’s power to impose an administrative fine is subject to a limitation period of three years after the offence was committed. DNB is, in principle, obliged to enforce the Act. However, it is free to decide what enforcement instrument it will use. DNB’s enforcement policy is detailed and documented in the AFM-DNB Enforcement Memorandum.
On whom may an administrative fine be imposed?
First, a fine may be imposed on the person breaching a statutory provision (the offender). In the General Administrative Law Act (Algemene wet bestuursrecht), an ‘offender’ is understood to be the person committing or co-committing the offence. The Act also provides that offences may be committed by natural persons and legal entities.
In order 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 subject within criminal law must be considered. Co-commission of an offence is in evidence when one or more natural persons or legal entities jointly breach the law, underlain by deliberate cooperation and joint implementation.
Second, since 1 July 2009 (when the fourth tranche of the General Administrative Law Act (Algemene wet bestuursrecht) entered into force), it is possible, if an offence is committed by a legal entity, to impose a fine not only on that legal entity but also on the natural person who instructed the offence to be committed, as well as on those who were actually in charge of the commission of the offence. Before that time, this was not possible under the financial legislation then in force (with the exception of the Pension Act (Pensioenwet).
For a fine to be imposed on a natural person actually in charge of the commission of the offence, it must be established that the legal entity has committed an offence. Designating a natural person as being actually in charge of the commission of an offence is subject to two minimum conditions, as formulated by the Netherlands Supreme Court (Hoge Raad) in its so-termed Slavenburg II order of 16 December 1986 (Nederlandse Jurisprudentie 1987, 321/322):
- the officer concerned fails, although empowered and in reason obliged to do so, to take measures to prevent the offence, and
- deliberately accepts the considerable risk that the offence will be committed.
For more details about the concepts of ‘instructing’ and ‘being in charge of’, the reader is referred to the section ‘Download’ below (frequently asked questions about imposing fines on natural persons).
Before imposing an administrative fine, DNB is obliged to notify the person or entity concerned of its intention. This notification must state the reasons why DNB intends to impose an administrative fine. The person or entity concerned subsequently has an opportunity to inform DNB of his/her/its response to this intention. A person who or entity which is to be questioned in connection with an administrative fine is not obliged to make a statement. Prior to the questioning, the person or entity concerned is informed that he/she/it is not obliged to answer.
The administrative fine must be paid within six weeks after the order to impose the fine becomes final. If an objection or application for review is lodged, the obligation to pay is suspended until the term of review has lapsed or until a decision on the review has been made.
Concurrence of administrative fine and criminal law
In many cases, breaches of the Financial Supervision Act (Wet op het financieel toezicht) not only attract an administrative fine but also constitute an economic offence that is punishable under the Economic Offences Act (Wet op de economische delicten). As an offence cannot be penalised more than once, DNB consults with the FIOD-ECD (Fiscal Information and Investigations Service – Economic Investigation Service) and the Public Prosecutions Department to decide whether the offence is to be penalised under administrative or criminal law.
DNB will publish all decisions to impose an administrative fine after the decision has become final. DNB will only refrain from publication if it believes that this is or may be counterproductive to achieving the objective of its supervision under the Financial Supervision Act (Wet op het financieel toezicht).
In addition, decisions to impose fines on account of certain types of grave offences are published five working days after the decision has been made known, i.e. before the decision imposing the fine has become final. These serious offences are:
- breaches of prohibitions or market access provisions
- breaches of provisions falling within fine categories 4 or 5
- breaches of other sections specifically mentioned in the Act.
DNB will only refrain from publication if it believes that this is or may be counterproductive to achieving the objective of its supervision under the Wft.
During the period of five working days between the announcement and the publication, the offender may, pending a decision on the objection, apply for a preliminary injunction. In such a case, the decision will be suspended until the preliminary injunction court has passed judgment. In urgent cases, DNB can publish the imposition of the fine immediately, without observing the period of five working days.
Objection and review
A person who or entity which disagrees with the imposition of an administrative fine may lodge an objection with DNB within six weeks of the day on which the decision has been announced. In that case, DNB will review its decision to impose the administrative fine. If the objection is rejected, the offender may lodge an appeal with the administrative court in Rotterdam, and may subsequently appeal from that court’s decision to the Trade and Industry Appeals Tribunal (College van Beroep voor het bedrijfsleven).