Regulatory Alerts2018-04-18
Added · Updated
Fixed and Flexible Fine Rates for Financial Supervision Offences
Non-compliance with financial supervision legislation is classified into three categories based on gravity, with Category 1 offences carrying a fixed fine of EUR 10,000 that may be reduced but not increased. Category 2 and Category 3 offences use a flexible system where base amounts of EUR 500,000 and EUR 2,000,000 respectively can be adjusted by up to 50% based on factors such as duration and blame, resulting in maximum fines of EUR 1,000,000 and EUR 4,000,000. Fines for all categories are further determined by considering repetition, ability to pay, and proportionality, with Category 3 offences capped at EUR 5,000,000 under specific anti-money laundering and financial supervision acts.
Q&A
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Question:
What is the difference between fixed and flexible fine rates and what are the rates in the three categories?
Published: 18 April 2018
Answer:
An instance of non-compliance with financial supervision legislation is in one of three categories, depending on the gravity of the non-compliance. A category 1 offence carries a fixed fine of EUR 10,000. This amount may be reduced but cannot be increased.
A flexible system is used for category 2 and category 3 offences, which means that the base amount 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%.
Fines for all offences – irrespective of whether they carry a category 1, 2 or 3 fine – are imposed taking account of repetition, ability to pay and proportionality.
What are the rates in the three categories?
Category 1 covers minor offences, such as failure to submit specific reports to the supervisory authority by the specified deadlines. The base amount for category 1 is EUR 10,000.
Category 2 covers offences including failure to meet expertise and integrity requirements and failure to comply with the duty of care. The base amount is EUR 500,000 and the maximum amount is EUR 1,000,000.
Lastly, category 3 covers the gravest offences, including performing activities subject to a licence requirement without a licence and using inside information. The base amount is €2.000,000 and the maximum amount is €4.000,000, although this category is capped at €5,000,000 in the Anti-Money Laundering and Anti-Terrorist Financing Act (Wet ter voorkoming van witwassen en financieren van terrorisme – Wwft) and the Financial Supervision Act (Wet op het financieel toezicht – Wft).
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